Aluminum Prices and Supply Disruptions

The Aluminum Monthly Metals Index (MMI) saw a slight increase of 0.5% from September to October, maintaining overall stability. Meanwhile, aluminum prices are on the rise, influenced by various factors.

Novelis Oswego Fire Disrupts U.S. Supplies

A significant fire at Novelis’ Oswego facility has drastically impacted U.S. aluminum production capacity. The incident on September 16 caused major damage, rendering the hot mill out of commission until early 2026. As a result, the company declared force majeure, affecting shipments for motor vehicles, beverages, and container inventory.

This disruption is particularly critical as the plant provides about 40% of the aluminum plate utilized in the automotive sector, totaling around 350,000 tons. Novelis is making efforts to reduce supply interruptions for key customers, but Ford’s stock price dropped right after the incident.

Novelis’ parent company, Hindalco Industries, operates rolling mills in several countries, including Europe, Brazil, and South Korea. These facilities could serve as alternative sources until Oswego is back online. However, given the current 50% tariff on overseas imports, the costs associated with securing these materials will rise.

U.S. Aluminum Prices Rise After Fires

The fire incident has reshaped the general outlook for U.S. aluminum prices. Prior to the fire, the market was bracing for a typical slowdown as the year wraps up, with expectations of relatively stable pricing and potentially easing Midwest premiums.

However, following the disruption, service centers reported increased conversion costs across U.S. plants. The Midwest premium surged to an all-time high of $0.77 per pound by October 6, surpassing most market participants’ expectations following U.S. tariffs.

Historical discrepancies caused by power outages may normally not significantly influence aluminum prices, but the Oswego event has made a notable impact this time.

Tariffs Amplify U.S. Disruption Significance

With the expectation of a rush in January to avoid tariffs, aluminum imports have generally trended downward throughout 2025, which has tightened domestic supplies. Data shows a 3.69% decrease in aluminum plate imports from February to August compared to the same timeframe last year.

The overall decline in aluminum import levels was more striking, with total imports dropping by 10.17%. This reduction corresponds with an increasing wariness among brokers and distributors regarding long-term offshore contracts recently.

Interestingly, even with decreased imports, the U.S. remains a net importer of aluminum, highlighting a constant demand for offshore supply. Yet, due to tariffs, buyers are increasingly leaning towards domestic producers. This shift is not solely due to cost pressures from tariffs; recent supply shocks have made procurement organizations more focused on security and risk management.

The irony here is that domestic supply disruptions are now having a more pronounced effect on market stability, potentially leading to ongoing volatility in aluminum pricing.

Will the Upward Trend in Aluminum Prices Continue?

Aside from the hike in domestic premiums, foreign exchange prices are also steadily climbing. For instance, LME three-month aluminum prices rose by 2.61% last month, reaching a peak not seen since March. This trend aligns with price increases in other base metals like copper, zinc, and tin.

The recent interest rate cuts by the Fed have weakened the U.S. dollar index, contributing to gains in commodities that typically decline when the dollar strengthens, including metals. Nevertheless, with persistent inflation, the Fed might adopt a more cautious stance in the coming year.

Simultaneously, aluminum inventories have risen, even amid China’s production limits. As of early October, LME aluminum stocks were at their highest since March, driven by supply concerns that have influenced price trends lately and fostered a bullish sentiment among investors. That said, global demand remains soft, with consumption in the U.S. and Canada declining by 4.4% in the first half of the year, according to the Aluminum Association.

Aluminum prices exhibit an upward tendency for now, but without significant changes in market dynamics, sustaining this positive trend could prove challenging in the upcoming months.

Aluminum Prices: The Biggest Moves

• European 5083 aluminum plate prices saw the largest increase, up 3.79% to $4,654 per tonne by October 1.
• European 1050 aluminum plate prices rose by 3.74% to $3,414 per tonne.
• LME primary three-month aluminum prices remained stable, increasing by 2.61% to $2,678 per tonne.
• The premium for 3003 coil over 1050 Korean aluminum declined by 2.23% to $3.99 per kilogram.
• Korean commercial 1050 sheet prices decreased by 2.25% to $3.95 per kilogram.