News
03/01/25
Viewpoint: Tariffs will push US Al prices up
Houston, 3 January (Argus) — New tariffs planned by president-elect Donald Trump
are set to lift US aluminum scrap, alloy and finished prices in 2025, raising
costs and concerns for consumers as demand is on track to rebound across several
end markets. Trump has pledged to implement a 60pc tariff on all imports from
China and, on his first day in office, levy 25pc tariffs on all imports from
Mexico and Canada unless they boost security on their borders with the US. It is
unclear if Trump will follow through with such threats, but his fondness for
tariffs during his first term has industry taking the claims seriously. These
three countries made up just over two-thirds of unwrought aluminum imports to
the US, about 42pc of finished aluminum product imports and 90pc of scrap
imports through September 2024, according to the latest available customs data.
Canadian, Chinese, and Mexican aluminum and aluminum products are so pervasive
in the US market that any tariff could simultaneously lift prices on a wide
range of scrap, alloy, and end-product grades. Imported aluminum made up about
54pc of the 6.05mn metric tonnes (t) of new aluminum supply in the US
year-to-date through August, US Geological Survey data showed in November. The
US also imported 399,000t of aluminum scrap from Mexico and Canada through
August, compared with the roughly 2.35mn t of aluminum recovered through scrap
over that same period. Industry consumers concerned Faced with potentially
higher prices in multiple key segments of the aluminum market, industry
consumers — many of whom service the automotive, packaging, and construction
markets — will be forced to compete for imports from other countries. This shift
in flows is expected to raise buying costs because equivalent alternatives do
not exist for every grade and type of aluminum. Buyers are also set to raise
bids as retail consumer demand rebounds in 2025. Norwegian aluminum producer
Hydro expects rate cuts by the Federal Reserve to lift consumer spending as
borrowing costs come down, pushing demand for extrusion-related products higher
in 2025 . For the same reason, aluminum packaging firm Ball expects end-consumer
demand for aluminum cans to rise in 2025. Other market participants are also
expecting lower borrowing costs and policy decisions by the Trump administration
to improve consumer purchasing power, which would drive up end-consumer demand,
and buyer bidding with it. Some market participants have expressed doubts that
Trump will actually institute tariffs on the scale he has promised, or they
believe he will make exceptions for some markets like aluminum. But they all
seem to agree that the Trump administration will enact protective trade policies
on some scale. China's preemptive response In anticipation of Trump's tariff
plan, China announced the repeal of a 13pc export tax rebate on all finished
aluminum products on 15 November. Chinese aluminum exporters only made about a
9pc profit margin prior to the repeal, according to Chinese traders , so the
repeal will make further exports unsustainable at current prices. Chinese
exporters sold about 5.17mn t of aluminum fabricated products over
January-October , or about 9.2pc of China's production, according to data from
China's National Bureau of Statistics. Exporters then sold near-record volumes
in November , chasing profits before the rebate repeal took effect on 1
December. US market participants now expect Chinese exporters to stop shipping
goods to the US, which receives about 16pc of its finished aluminum imports from
China when measuring by weight using harmonized tariff codes 7603-7610 and
7614-7616, according to customs data. Chinese exporters will have to pivot back
to their domestic market where they will pay neither export taxes nor shipping
fees. This decrease in US supply will push US domestic offers for finished
aluminum products even higher than tariffs alone would in the short term. Some
exporters may try to continue selling to the US, albeit at higher prices. As
former exporters add to the Chinese domestic supply of finished aluminum
products, offers will fall to remain competitive in an oversupplied market. As
prices fall in China and rise in the US, sufficiently profitable arbitrage
opportunities could reopen for exporters. Some market participants expect other
countries to make similar decisions in response to US tariffs and protectionist
trade policy, but no country has made any policy decisions so far other than
China. Nations would most likely make it more difficult for the US to acquire
material through tariff countermeasures, which would cut supply and push prices
even higher than tariffs alone. By Cole Sullivan US Aluminum Production and
Consumption 000s of metric tonnes Aug-24 Aug-23 Difference ±% Jan-Aug 2024
Jan-Aug 2023 Difference ±% Primary production 56 62 -6 -9.7% -52 -10.3%
Secondary recovery, new 166 153 13 8.5% _(* 1,300 _(* 1,240 60 4.8% Secondary
recovery, old 132 138 -6 -4.3% _(* 1,050 _(* 1,060 -10 -0.9% Imports, metals and
alloys 268 283 -15 -5.3% _(* 2,410 _(* 2,600 -190 -7.3% Imports, plates, sheets,
bars, etc. 94 94 0 0.0% 134 19.0% Total new supply 716 730 -14 -1.9% _(* 6,050
_(* 6,110 -60 -1.0% US Census Bureau US Aluminum Imports Metric tonnes (t)
Country and product Jan-Oct 2024 Jan-Oct 2023 Difference ±% % Share of 2023-YTD
2024 imports Canada Powder and flakes 62 291 -229 -78.7% 2.4% Bars, rods, and
profiles 74,005 71,305 2,700 3.8% 28.6% Aluminum wire 160,921 161,366 -445 -0.3%
71.2% Plates, sheets, and strip (thickness > 0.2mm) 111,453 126,194 -14,741
-11.7% 20.0% Aluminum foil 2,541 3,328 -787 -23.6% 1.4% Tubes and pipes (excl.
hollow profile) 1,104 1,686 -582 -34.5% 7.0% Tube or pipe fittings 365 393 -28
-7.1% 4.8% Structures and parts of structures 57,970 56,794 1,176 2.1% 19.3%
Stranded wires, cables, plaited bands and the like 7,766 6,459 1,307 20.2% 4.9%
Cans <=355ml (number of units) 248,162,546 387,066,900 -138,904,354 -35.9% 22.0%
China Powder and flakes 1,884 971 913 94.0% 8.0% Bars, rods, and profiles 3,028
3,323 -295 -8.9% 1.3% Aluminum wire 2,000 2,505 -505 -20.2% 1.1% Plates, sheets,
and strip (thickness > 0.2mm) 116,104 95,597 20,507 21.5% 15.2% Aluminum foil
58,618 57,412 1,206 2.1% 24.1% Tubes and pipes (excl. hollow profile) 533 540 -7
-1.3% 2.2% Tube or pipe fittings 3,877 3,920 -43 -1.1% 47.6% Structures and
parts of structures 77,665 67,409 10,256 15.2% 22.9% Stranded wires, cables,
plaited bands and the like 376 541 -165 -30.5% 0.4% Cans <=355ml (number of
units) 46,173,987 17,343,226 28,830,761 166.2% 1.0% Mexico Powder and flakes 20
124 -104 -83.9% 1.0% Bars, rods, and profiles 30,606 37,180 -6,574 -17.7% 14.9%
Aluminum wire 406 101 305 302.0% 0.5% Plates, sheets, and strip (thickness >
0.2mm) 4,827 2,225 2,602 116.9% 0.4% Aluminum foil 515 1,355 -840 -62.0% 0.6%
Tubes and pipes (excl. hollow profile) 9,151 11,116 -1,965 -17.7% 46.1% Tube or
pipe fittings 807 692 115 16.6% 8.4% Structures and parts of structures 28,111
31,334 -3,223 -10.3% 10.7% Stranded wires, cables, plaited bands and the like
15,090 17,921 -2,831 -15.8% 13.6% Cans <=355ml (number of units) 400,820,082
1,098,867,748 -698,047,666 -63.5% 62.5% US Census Bureau Send comments and
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