The China Nonferrous Metals Industry Association (CNMIA) said on Monday that foreign media accusations that a Chinese company is using transshipping, a method of evading U.S. tariffs, by routing aluminum through Mexico to disguise its origins "seriously deviated from reality."
The CNMIA rebutted the transshipping claims raised on Friday by the Wall Street Journal. The U.S.-based newspaper said China Zhongwang Holdings, the world's second-largest producer of aluminum extrusions, had stored nearly 1 million metric tons of aluminum worth some $2 billion in a Mexican town, with intentions of shipping it to the U.S. to avoid tariffs on Chinese exports.
China Zhongwang said in a statement sent to the Global Times on Monday that the company has no manufacturing base in any foreign countries, and that the company always abides by all international trade regulations and relevant government laws on exports.
Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, said judging from what has been disclosed by overseas media on the matter, the evidence is not strong enough to prove that the transshipping practice really exists.
"First, overseas reports about the aluminum in Mexico and its origin are not clear enough. Second, overseas media organizations haven't got sufficient proof that the stockpile is used for transshipping instead of for other purposes, such as for sale in Mexico," Bai told the Global Times on Monday.
Xu Ruoxu, an analyst from Shenwan Hongyuan Securities, said Chinese companies might export virgin aluminum to Mexico, process it into aluminum ingots, and then ship the latter to the U.S., because the U.S. charges a high tax on direct exports of aluminum ingots from China.
But according to the CNMIA, the Chinese government levies a 15 percent tax on all virgin aluminum exports, and therefore Chinese companies can hardly make any profits from virgin aluminum exports.
It also noted that if China transships virgin aluminum to the U.S. via Mexico, the products can't obtain a legal certificate of origin from Mexico, and the importer will still need to pay duties levied by the U.S.
The CNMIA also noted that if the "discovered" aluminum stockpile is composed of processed aluminum products imported from China, it doesn't violate export laws in China or import laws in Mexico.
