Two-phase cut for EU aluminium import duty in the pipeline

There is a proposal in the pipeline for a two-phase cut to the European Union's 6% aluminium import duty, with the first cut to 3% expected in January and a subsequent reduction to zero in 2009, a source close to the European Commission told Platts Friday.

"At the moment there are internal consultations within the EC over the proposal," the unnamed source said, adding that the commission was optimistic that the proposal would be presented to the EU member states committee in December and implemented in January. "It is likely that there will be a decision and implementation by January," he noted. He said, however, that if the legislation was not ready for January, market participants might be able to claim back the duty retroactively. Asked if this would be an administrative nightmare, the source said: "No, I don't think it will be so bad--it will all depend on the period of retroactivity."

A European Commission official would not comment on the specifics of any proposal but said the EC was "having internal discussions on both timing and the scope of the possible suspension." He said the EC was not engaged in "proper negotiations on aluminium duty--we are not discussing any arrangement with a third country." The official added that it was still unclear when the regulation would be presented to the European Union member state council and whether it will be a partial or complete suspension.
Meanwhile, the European physical market remained abuzz with rumors over the duty cut this week. An Eastern European aluminium market source said a reduction in the duty to 3% would mean that buyers had more options to secure deliveries. "This is a crucial time for aluminium. With the reduction in duty the market will become far more competitive because further material should be attracted to Europe," he said.

An extruder said it was ambitious of the EC to pass the reduction by January, but "I believe if they only pass it by March people will be able to claim retroactively--which will be a nightmare," he said adding: "No one believes in too much happening yet, but we all have clauses in our contracts in case." A producer source said he did not believe the commission would get itself into the mess of retroactive claiming.