Market
October 29, 2024
Kaiser Aluminum eyes positive impact of tariffs
Written by Stephanie Ritenbaugh
With much of its business focused in North America, Kaiser Aluminum sees further tariffs as a potential positive.
“Other than on the aerospace side and on semiconductor, we’re mainly focused on North America for our customers and the outlets for our products,” said president and CEO Keith Harvey. “So quite frankly, additional tariffs, anything that helps strengthen North American manufacturing, is going to be a big positive for us.”
The Franklin, Tennessee-based company produces semi-fabricated specialty aluminum products for the customers in aerospace, packaging, general engineering, automotive extrusions, and other industrial applications.
“I think you’ve seen some momentum move on those tariffs,” Harvey said during the company’s third quarter earnings call, noting that Canada and Mexico have raised their tariffs. “I believe, ultimately, stronger North American manufacturing and how we’re positioned there will do nothing but strengthen this company.”
Tariffs have become a hot topic during the U.S. presidential election, with Republican candidate Donald Trump calling for sweeping tariffs. RMU’s parent company CRU Group has called the former president’s proposals “highly inflationary” by raising the costs of domestic goods and likely would provoke other companies to retaliate in kind.
In 2018, the U.S. enacted Section 232 tariffs on steel and aluminum imports, claiming the need to protect national security. That added a 10% tariff on aluminum imports, including from Canada and Mexico. Those countries responded with tariffs of their own. This summer, the Biden Administration revisited the move, decreeing that steel imports from Mexico again be subject to a 25% tariff, as well as a smelt-and-cast requirement for aluminum imports from Mexico. The latter means any product from Mexico whose “primary country of smelt, secondary country of smelt, or country of most recent cast” is China, Russia, Belarus, or Iran will be subject to 10% 232 duties upon entering the U.S.
Overall, the aluminum products manufacturer expects the market to improve in the months ahead.
In the packaging end-market, industry momentum and improvements at the Kaiser’s Warrick facility in Indiana are expected to continue as it nears the completion of its fourth coating line investment, which will drive margin improvement starting in 2025, the company reported.
“In general engineering, destocking within the company’s long products has concluded with shipment levels now in better alignment with end-market demand. In automotive extrusions, the company is maintaining a positive outlook as production for light and heavy truck and sport utility vehicle platforms has outpaced broader automotive production rates,” it said.
However, Kaiser is cautious on its near-term outlook for its aerospace/high strength applications, due to the timing of customer commercial and labor negotiations which may have a short-term impact on demand and shipments, it said.
Kaiser reported net income of $12 million for the third quarter, or 0.74 per diluted share. That’s up compared to the same period a year ago, when it saw profit of $5 million, or 0.34 per diluted share.