AEC Files Circumvention Case Against China Zhongwang

Earlier this year, the Aluminum Extruders Council (AEC) made its case to the United States government on allegations of transshipment by Chinese aluminum extruder Zhongwang Holdings Ltd. Now, the organization is homing in on alleged circumvention by the company.

Last week, the AEC filed a petition with the Department of Commerce accusing Zhongwang of evading duties on aluminum extrusions imported into the U.S.

The alleged scheme, according to the Council, involves hundreds of millions of pounds of aluminum extrusions that are cut and welded into aluminum slabs.

AEC director of operations Jeff Henderson says that upon entering the U.S., the extrusions are being identified as “pallets.” The Council asserts that testimony it has gathered “makes it clear the sole purpose of these extrusions is to re-melt them back into billets,” which is the starting stock for the aluminum extrusion operation.

“Extrusion billet may be a solid or hollow form, commonly cylindrical, and is the length charged into the extrusion press container that then is pushed through the die to form extruded profiles that are often cut to length and further processed into final products,” the AEC explains in a release.

Henderson says “the question for Zhongwang is, ‘what is the purpose of these slabs?’ Just explain to everyone what you’re bringing in.”

The Department of Commerce has 45 days to review and decide whether or not to launch a full investigation.

Today, the Chinese business publication The Standard reported that the company’s response to the allegations is that it “always exports products under trade rules,” adding that products sent to the United States “are deep-processed ones excluded from anti-dumping and anti-subsidy rules.”

In July, short-seller Dupre Analytics released a detailed report accusing the company’s chairman of inflating Zhongwang’s sales over the past four years by shipping out semi-finished aluminum products from China to companies that he and people close to him control overseas, where the material was allegedly reprocessed back into aluminum billet and sold again.

Zhongwang denied the allegations, and Dupre followed up with another report accusing the company of lying.

Henderson says the AEC has been looking into the alleged circumvention for about a year but that things picked up this spring and were further spurred along upon the release of the Dupre report.