U.S. aluminum premiums soar 155%, hitting a record high, as tariffs and tight supply increase cost pressures

The premium in the U.S. aluminum market has surged to an all-time high, making the cost of acquiring aluminum unprecedentedly expensive. This increase is driven by a significant rise in tariffs and structural tensions in global supply, directly impacting industries such as construction, electricity, and packaging that heavily rely on aluminum materials. On November 10th, according to media reports, the Midwest region's tax-inclusive premium reached 88.10 cents per pound (equivalent to a record high of $1,942 per ton) last Friday. Coupled with the London Metal Exchange benchmark price of $2,850 per ton, the actual price paid by U.S. spot buyers has risen to $4,792 per ton. Since June, the cumulative increase in this premium level has exceeded 155%. (Buyers in the U.S. spot market typically pay the London Metal Exchange benchmark price plus a premium to cover shipping, taxes, and other costs.) Tariff Costs Surge as Major Driver According to Xinhua News Agency, the Trump administration raised the aluminum import tariff from 25% to 50% in June this year, resulting in a current tariff burden of $1,425 per ton, more than doubling from $560 at the beginning of the year. Consulting firm Harbor Aluminum pointed out that the decline in U.S. aluminum inventories and strong expectations for the permanence of tariffs have jointly driven up the premium. After Trump canceled trade negotiations with Canada in October, market expectations for the permanence of tariffs were further strengthened. Data shows that Canada is the largest source of aluminum supply for the U.S., with exports to the U.S. exceeding 2.7 million tons last year, accounting for 70% of total U.S. imports. The uncertainty surrounding this core supply channel has sharply intensified market tensions. Dmitri Ceres of U.S. aluminum trader PerenniAL stated: “Trump has basically indicated that no agreement will be reached before the end of his term. Therefore, even those who were optimistic about a potential agreement have now abandoned that position.” Global Supply Faces Structural Shortages Another important factor contributing to the rising cost of aluminum in the U.S. is the ongoing tightening of global aluminum supply. Panmure Liberum analyst Tom Price expects a supply gap of 1.8 million tons in the aluminum market this year. He noted: "In the past 2-3 years, China's net exports of refined metals and semi-finished products have decreased by 900,000 to 1.9 million tons annually. During the same period, aluminum production outside of China has decreased by 1.1 million tons per year. Together, these two factors mean that aluminum supply outside of China has decreased by 2 million tons." This structural supply tension provides ongoing support for the premium in the U.S. market, and it is expected that the high premium status will continue unless there is a fundamental change in tariff policies and the global supply-demand landscape