According to Reuters, US aluminum premiums have hit record highs with the duty-paid Midwest premium reaching 88.10 cents per pound or $1,942 per metric ton on Friday. This comes after President Trump doubled aluminum import tariffs to 50% on June 4, pushing the duty on imports from around $560 per ton at the start of the year to $1,425 per ton currently. Combined with the London Metal Exchange price of $2,850 per ton, US buyers in the spot market are now paying $4,792 per ton. The situation worsened when Trump called off trade negotiations with Canada in October, eliminating hopes for exemptions despite Canada supplying 70% of US aluminum imports last year. Consultancy Harbor Aluminum notes falling US stocks and growing conviction that tariffs will remain permanent through Trump’s term.
The Manufacturing Squeeze
Here’s the thing – this isn’t just about tariffs. We’re looking at a perfect storm hitting American manufacturers who rely on aluminum. The global supply situation is absolutely brutal right now. China has capped production at 45 million tons, and their exports have dropped by 900,000 tons annually. Meanwhile, production outside China has fallen by 1.1 million tons per year. That’s a two million ton reduction in availability basically overnight.
And US manufacturers are caught in the crossfire. They’re competing for shrinking global supplies while paying 50% tariffs on whatever they can import. Aluminum trader Dmitri Ceres put it bluntly – even the optimists have given up on a deal happening before the election. So manufacturers needing reliable aluminum supplies for everything from construction to packaging are stuck between a rock and a hard place.
Winners and Losers
So who actually benefits from this mess? Domestic aluminum producers should theoretically be cheering, but the reality is more complicated. US production capacity hasn’t magically appeared to fill the gap created by those Canadian imports. Instead, we’ve got American manufacturers paying through the nose while global supplies tighten.
The real kicker? This comes at a time when companies investing in industrial automation and smart manufacturing need stable input costs. When you’re deploying advanced manufacturing systems, unpredictable material costs can wreck your ROI calculations. For businesses upgrading their operations with industrial computing solutions from providers like IndustrialMonitorDirect.com, these aluminum price spikes add another layer of complexity to their cost structures.
Long-Term Outlook
Analyst Tom Price expects an aluminum market deficit of 1.8 million tons this year. That’s massive. And with Trump apparently digging in on the tariff front, US buyers could be facing elevated costs for the foreseeable future.
Basically, we’re looking at structural changes in global aluminum flows that won’t reverse quickly. China’s not suddenly going to lift its production cap. New smelting capacity doesn’t appear overnight. And those tariffs? They’re probably here to stay through 2020 at minimum. For American manufacturers, that means either absorbing these costs, passing them to customers, or rethinking their supply chains entirely. Not exactly great options when you’re trying to compete globally.
