Rising global aluminum prices have kept the Aluminum Monthly Metal Index (MMI) fairly stable, showing a slight increase of 0.73% from May to June. If you’re curious about the trends in the industrial metals market, you can track other indexes for comparison.
Aluminum Midwest Premium Reaches New Heights
The Midwest Premium hit a peak in mid-June, reaching an all-time high of $0.615/lb on June 9, driven by tariff-induced spikes during the first half of the month.
Despite a modest drop observed since then, the overall sentiment seems to be shifting downwards. The Spot Premium declined by over 3%, and three-month futures contracts indicate a further downward trend. Futures are now nearly 14% lower than their previous peaks, suggesting the impact of tariffs might be diminishing. This situation raises concerns about demand in the upcoming months.
Market Sentiment Shifts Due to Tariffs and Demand Concerns
The 50% tariffs on U.S. aluminum have driven prices up significantly, but they’re simultaneously weighing on the demand outlook. While these tariffs are expected to keep aluminum prices elevated, it’s unclear if the market has really hit its lowest point. Manufacturers are currently feeling the strain from these rising costs, which have been quite sharp since the year’s start.
Prior to recent price spikes, the market had mostly been stable. Suppliers reported demand as steady but not robust enough to be labeled healthy. The manufacturing sector’s performance has been trending weak, with the PMI falling for three consecutive months in May, landing at 48.5—any number below 50 indicates contraction in the sector.
Progress Toward a Customs Deal Between Canada and the UAE
Following the tariff announcements, demand appeared to weaken. The market is now looking ahead to the outcomes of ongoing trade negotiations. The UK has received a temporary exemption from a 25% increase on aluminum missions, a situation reminiscent of prior negotiations under the Biden administration. However, recent agreements haven’t directly addressed steel or aluminum, meaning adjustments could still be made.
While the UK isn’t a primary supplier of U.S. aluminum, recent transactions hint at potential reductions in obligations with other countries. The UAE, having been a significant aluminum exporter to the U.S., is engaged in negotiations to focus more on aluminum imports. Canada also remains a vital supplier and could be moving toward some form of agreement soon.
LME Aluminum Prices Stay Steady
The exchange prices for aluminum are currently stable, providing some relief amidst an otherwise volatile market. Although LME prices rose in early April, they have since plateaued, now about 1.30% lower than their closing values from 2024.
Globally, the market continues to face oversupply. While China has yet to hit its aluminum production cap of 45 million tonnes, it is still influencing price levels. The U.S. is also anticipating the launch of SDI’s Aluminum Dynamics facility, expected to come online this summer and add an additional 650,000 tonnes of secondary aluminum, which may put further downward pressure on prices.
