Tariffs to 'cripple' UK alloy industry in hard Brexit

The tariff imposed on UK secondary aluminium alloy exports to Europe in the event of a no-deal withdrawal from the EU will cripple the British industry, according to a source at one UK secondary alloy producer.

"You cannot feasibly have any import duty that will cripple your company — you will have to close half your firm," the source said.

The UK leaves the EU on 29 March and London has yet to agree a divorce settlement. If the UK leaves without agreement, this "hard Brexit" will mean metal deliveries between Europe and the UK will be subjected to custom clearance and duties. A 6pc duty will be imposed on UK aluminium goods exported to the EU, for example.

The UK is a major secondary aluminium alloy producer and exports to the EU are key for many domestic re-melters. Secondary alloy 226 and other grades are used to manufacture automotive engines and gearboxes.

The UK exported £1.2bn of aluminium goods to the EU in 2015, according to the Office for National Statistics. These included secondary alloy, engines and vehicles.

The UK manufactured 2.7mn engine units in 2018, with exports accounting for 63pc this, according to the Society of Motor Manufacturers and Traders (SMMT).

British commercial vehicle manufacturing grew by 8.5pc to 84,888 units in 2018, with Europe accounting for nine out of 10 vehicles exported, data from SMMT shows.

"With fewer than 60 days to go until the Brexit deadline and ongoing uncertainty over the chances of agreeing a withdrawal deal, the future of this trade hangs in the balance," SMMT chief executive Mike Hawes said.

This uncertainty means some UK aluminium alloy market participants are unable — and lack the financing — to plan for the event.

"You can spend lots of money to prepare for something that [may not] happen; people do not have that much cash to stock up," a source at a second UK aluminium alloy producer said.