Aluminum Premium in US Midwest Hits New High, with Supply Uncertainty and Global Trade Tensions Affecting Sentiment

In the days following the US President's decision to double the import tariffs on steel and aluminum from 25% to 50%, non-ferrous metal market participants expressed various concerns about fundamental changes at an industry event held from June 2 to 5.

From June 4 (the day the tariff hikes took effect) to June 9, the Midwest aluminum premium in the US rose by nearly 15%. Some traders and consumers indicated that they expected demand destruction, although this would not occur until around October 2025. Other common views among market participants included: uncertainty about long-term demand planning; divergent views on the performance of end-use sectors; doubts about the pace of domestic supply expansion; and changes in global trade flows.

A consumer stated that even with the import tariffs in place, the US would still need to source materials from other countries.

"This won't solve anything," the person said of the tariffs, adding, "We're too dependent on imports."

As market participants are still waiting to see if the 50% tariff rate will remain unchanged, overall macroeconomic uncertainty has made it increasingly difficult to assess demand and make purchases accordingly, market participants said.

A producer stated, "Next year's plans will be different. We will closely monitor demand."

**Uncertainty in the Second Half of the Year**

The aforementioned consumer mentioned that demand destruction could occur in the automotive and construction industries. Currently, views on industry performance vary: a trader mentioned that the aerospace industry is performing better compared to the automotive and can industries, while the same producer also mentioned a slowdown in the EV market.

Another producer said, "We are concerned that the automotive industry will slow down in the second half of 2025."

Market participants said that fluctuations in global trade policies have prompted some changes in aluminum flows. Another consumer mentioned that some shipments from South America have been canceled due to the increased risk of importing raw materials amid higher tariffs. Meanwhile, the first producer stated that they are exporting little material to the US due to strong demand in Canada. Another trader said that Canadian goods are being shipped to Mexico and Europe.

Although aluminum manufacturer Emirates Global Aluminum recently announced a $4 billion investment to build a primary aluminum smelter in Oklahoma, US, many consumers are skeptical about whether the facility will be realized. A third consumer stated that no energy agreements have been signed yet, so the facility's energy needs will face fierce competition.

"I don't believe this will happen," said a third trader, referring to EGA reaching an agreement within the next six months. "There are significant downside risks."

**Aluminum Chain Price Trends**

The Midwest aluminum premium first hit a record high of 44.05¢ per pound on June 2, before continuing to rise to new highs from June 3 to 6. On June 6, it was assessed at a premium of 68¢ per pound over the LME average price, delivered to the Midwest, marking the latest record high. The premium then pulled back to 67¢ per pound on June 9.

The current premium level is nearly three times what it was at the beginning of 2025.

Market participants said that another factor that may weaken demand for P1020 is that scrap supply has loosened in the past few months as many consumers have exited the spot market. A scrap metal trader said that changes in the trading price of the Midwest premium have played a significant role in the supply of the scrap metal market.

The European Aluminum Association stated on June 4 that this material used in aluminum manufacturing does not face the same tariffs as other aluminum products, raising concerns about an accelerated outflow of European aluminum scrap. The Aluminum Association of the US said in a statement on June 5 that imposing a 50% tariff on aluminum imports would harm the US aluminum industry.

After the US implemented reciprocal tariffs, one of the countermeasures currently being considered by the European Commission is the potential imposition of export fees on aluminum scrap and waste destined for the US.

Paul Voss, Director General of European Aluminum, said, "The EU needs to introduce export fees applicable to all destinations (not just the US) to stem the outflow of scrap and ensure access to critical secondary raw materials."