EU and US suspend aluminum and steel trade war and target decarbonized production

02 Nov 2021 --- A new EU and US alliance could have wide-reaching ramifications for the metal packaging industry after political leaders announced they would be “hitting pause” on an aluminum and steel trade war that has raged since 2018 under the Trump presidency.

During the G20 Rome Summit, US President Joe Biden and European Commission (EC) President Ursula von der Leyen agreed to suspend current tariff measures in “a new milestone in the transatlantic relationship.”

According to both parties, decarbonizing aluminum and steel production will be the agreement’s chief aim. The partners stress cooperating on reducing the use of “dirty steel” – a reference to Chinese production practices – is essential to achieving the Paris Agreement’s carbon neutrality by 2050 goal.

Currently, China maintains a global monopoly on aluminum and steel, which it usually produces through iron and coking coal. US and EU governments also accuse China of illicit dumping practices – something it strongly denies.

PackagingInsights is awaiting further comment from an EC spokesperson, who said a new arrangement will be “an important addition to our toolbox to tackle climate change.”

High recycling but high emissions
Despite high recycling rates for both aluminum and steel packaging, production practices account for some of the largest shares of global carbon emissions globally.

Steel production reportedly accounts for almost 10% of global carbon emissions.According to the World Steel Association, steel contributes between 7-9% of global carbon emissions, while technologies like carbon-capturing can help reduce the industry’s footprint.

Axel Eggert, director-general of the European Steel Association, welcomes the announcement of the new transatlantic cooperation.

“State-supported steel production and capacity building with carbon-intensive technologies contribute significantly to climate change. The global steel industry is responsible for almost 10% of global direct and indirect carbon emissions, while the less carbon-intensive EU steel industry accounts for only about 0.5%,” he asserts.

Meanwhile, aluminum production accounts for roughly 2% of global emissions. Kelly Roegies of trade association European Aluminium recently told PackagingInsights the carbon footprint of European primary aluminum production is one of the lowest globally.

There is approximately 7 kg of CO2 per kg of aluminum compared to a global average of 17 kg of CO2 and a Chinese average of 20kg of CO2, she explained.

Tensions with China
Carbon intensive production from China is underscored by the renegotiation announcements, with EU and US trade associations and governments celebrating the potential a renewed cooperation could have on breaking the Chinese monopoly.

Besides highlighting the need to cut emissions by boosting less energy intensive western production capacity, leaders also used the G20 summit to accuse China of illegal dumping practices – something President Biden says is “hammering our workers.” China is denying accusations of dumping by President Biden.

The Chinese embassy in Washington, US, strongly denied what it calls “the US groundless accusations.”

The magnesium issue
However, a recent boom in magnesium prices, for which China has an 87% global production monopoly, complicates the potential impact of the new US-EU cooperation for the packaging industry.

Magnesium is an essential alloy for aluminum, for which can-stock is made stronger, lower-density and faster for production rates.

A body of European metal associations called on the EU to take immediate action, warning decades of negligence toward the magnesium industry could lead to “catastrophe,” as China slashes production in efforts to cut its own energy footprint.

PackagingInsights has reached out to European Aluminium for comment on how the new transatlantic deal could impact the packaging industry.

By Louis Gore-Langton

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