Aluminium maker Hulamin said on Wednesday it had been hit with duty increases after the preliminary findings by the US department of commerce’s anti-dumping case against common aluminium, with SA's duty set at 8.98%.
On March 9, US producers filed a petition against imports of aluminium common alloy sheet from 18 countries, including SA. The petition claimed material harm to the US aluminium industry and sought tariff relief in the form of anti-dumping and countervailing duties.
Hulamin, whose share price on Wednesday shot up by a record 28% to R1.28 after the group reported an increase in third-quarter sales, sells a range of products to the US including common alloy sheet. The share price surge gives Hulamin a market capitalisation of R409m.
Opportune Investment MD Chris Logan said the duty was not hefty and Hulamin was unlikely to contest it. He said the company's priority was to “get their house in order”.
“I don’t think they would, fortunately, it’s not a heavy duty. From what I’ve seen, they won’t have much ability to,” Logan said.
He added that the company had other urgent priorities such as its cost control, bloated board structure and capital expenditure.
“This company’s been badly managed for at least a decade, it was spun out of Tongaat in 2007 and it has exactly the same problems as Tongaat. No cost control, management is doing well while the shareholders got less and less. It’s just been badly managed,” said Logan.
Historically, the US represented less than 15% of Hulamin Rolled Products’ total sales — a business which generated about 94% of the group's R3.7bn revenue to end-June.
Hulamin had said previously this affected largely low-margin products and it was seeking alternative product and market opportunities due to the threat.
The anti-dumping duty to be implemented for common alloy aluminium rolled products range from 0% for Italy to 353% for Germany.
The US department of commerce is scheduled to announce its final determinations in February 2021, and if upheld, the US International Trade Commission will make its determination in April 2021.
The aluminium group, which has denied dumping, said its third-quarter sales to end-September have improved, with order books in all its operations approaching normal levels.
Group sales in the third quarter to end-September rose to 45,000 tonnes, from 29,000 tonnes in the second quarter, with Hulamin saying confirmed orders for beverage can products, heat-treated plate and extrusions were particularly healthy.
Hulamin had been hit hard by Covid-19 shutdowns in its first half, and has said that due to the high fixed-cost nature of its business, improved volumes were key to its return to profitability.
Group sales in its six months to end-June had fallen 35% to 71,000 tonnes.
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