A cut in US tariffs on Canadian aluminium alone is unlikely to bring down the elevated Midwest aluminium premium significantly, according to Alcoa CFO Molly Beerman, as the US still relies on imports from other countries to cover a structural supply gap.
Speaking at the Jefferies Global Industrials Conference in New York, Beerman said the US needs to import around 4 million tonnes of aluminium a year, while Canadian suppliers can provide roughly 3 million tonnes. The remaining 1 million tonnes must come from other markets, where tariffs or other trade barriers continue to support higher delivered costs.
The Midwest premium, the surcharge US buyers pay above the London Metal Exchange aluminium price for physical metal, currently stands at USD 1.09 per pound (USD 2,403 per tonne). It has eased from a record USD 1.19 per pound in June amid expectations that the US could reduce its 50 per cent tariff on Canadian aluminium to 25 per cent.
But Beerman said a Canada-only tariff reduction would offer limited relief.
“With the U.S. still needing to incent the import of a million tons, even if we were to have a favorable rate with Canada, we don’t see Midwest dropping significantly,” Beerman said. “It might come off a little bit, but we wouldn’t see it returning to pre-tariff levels”, she added.