Magnitude 7 Metals LLC, a 50-year-old aluminium smelter on the banks of the Mississippi in southeastern Missouri, is losing money in all means that it might close down within the next 60 days, as per one of the senior executive of the plant.
In 2018, the bankrupted aluminium smelter was re-opened, followed US President Donald Trump’s additional tariffs imposed on aluminium importation. The tariffs generally do not cover the value-added aluminium products being shipped to the United States by overseas competitors, undercutting the company's position.
Magnitude 7 Metals, CEO, Charles Reali said: “The rest of the world has gamed the tariffs, in our opinion. The Commerce Department tried to help, but missed the mark."
The formidable outlook for Magnitude 7 has been worsening by the coronavirus, which is thumped around the globe while raising fears of a global recession.
On 28th February’20, the London Metal Exchange (LME) aluminium price fell to $1,676 per tonne, the lowest since October 2016.
Reali said: "We are in prayer mode. If things don't turn around in the next 60 days, I don't know."
Just 2 years ago Magnitude 7 Metals re-opened with great expectations. The ceremony was attended by then-Missouri Governor Eric Greitens.
Donald Trump’s 10% tariff imposing on aluminium secured more than 400 jobs in New Madrid County. This region’s one-fourth population lives under poverty. In 2016, the plant was called for shut down by its previous owner, Noranda Aluminium, filed for bankruptcy.
Reali also said: “The market for the plant's generic aluminium product, P1020, as absolutely terrible."
"These prices are 1988 and 1989 prices, dollar for dollar. Obviously, the costs are a hell of a lot more today than they were then," Reali said.
Magnitude 7's aluminium collects about $1,680 a ton on the metals market, down from about $2,100 a ton a year ago, Reali said. The original business plan, when former Glencore Plc trader Matt Lucke bought the plant for about $14 million out of bankruptcy, factored in a price of $2,300 to $2,400 per ton.
Reali added "We can't sustain what we are doing at the current price. Our costs are much higher. We're seeing red numbers every month."
Reali concluded: "We're here today. Can't speak for next week. It's a day-to-day thing."
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