The proposed aluminium import tariffs that are currently being considered by US President Donald Trump’s administration could have a positive impact on South African aluminium products manufacturer Hulamin’s operations, CEO Richard Jacob said in an interview with Engineering News.

He pointed out that, if aluminium supply from China was curtailed – the main aim of the tariff recommendations made by US Commerce Secretary Wilbur Ross being to create greater security for the US economy – it would create a global supply and demand imbalance that would push prices up.

“Hulamin could benefit.”

Hulamin already enjoys the benefits of duty-free access to the US as a result of both the Africa Growth and Opportunities Act and General System of Preferences legislation.

Although there is a proposed 24% tariff on aluminium imports to the US, South Africa is not on the list of countries on which this proposed tariff is to be imposed, highlighted Jacob.

Trump is also considering as much as 10% duty on all aluminium entering the US, which would be more than 2.5 percentage points higher than the harshest of Ross’s recommendations.

Jacob noted that, should Trump choose to limit the volume, or apply a tax on South African material, it could be negative, as the company currently has a 20% sales exposure to the country.

However, he remained positive, stating that the company had maintained a flexible production strategy, “[so] that we can change between products and markets quite quickly”. “We have a similar exposure to Europe – between 20% and 25% of our sales go to Europe and we could relatively easily increase our sales into Europe if the US market closes for us,” he pointed out.

The JSE-listed company’s rolled products section delivered another year of record sales in the 12 months to December 31, but extrusion sales were flat.

In total, the company sold 233 000 t of product, of which 215 000 t comprised rolled products.

Both businesses faced challenging local market conditions, although improved demand for beverage can products enabled Hulamin’s rolled products to increase its local sales by 22%.

The company further reported a 33% year-on-year increase in comparable earnings, in constant currency terms, on a strong operational performance, but noted that, owing to the stronger rand, its headline earnings per share fell by 13% to 104c apiece.

Turnover increased modestly to R10.2-billion, driven by the higher sales volumes, flat dollar rolling margins and the higher average London Metal Exchange aluminium price, at $1 968/t.

Earnings before interest and taxes declined by 13% to R538-million, and decreased by 16% to R517-million on a comparable basis, after adjusting for a R25-million insurance receipt in 2017.