US tariffs seen having limited impact on China’s aluminum consumption

The US tariff increase on aluminum is expected to have a limited impact on China's consumption of the metal due to the low level of China's exports to the US, China-based market sources said June 4.

But while the actual impact on Chinese exports would be limited, overall market sentiment would be affected, which could curb global aluminum trade liquidity, they added.

The tariffs would especially hit countries that rely heavily on exports to the US, intensifying regional supply pressure in the near term, they said.

A soaring US import premium and weakening demand caused by higher tariffs could lead to a supply surplus and lower premiums in Asia, some of the sources said.

US President Donald Trump signed an executive order to increase tariffs on steel and aluminum imports to 50% from 25%, effective from June 4.

China-US trade

China's exports of semi-finished aluminum products totaled 6.27 million mt in 2024, accounting for 9.2% of the country's total production, Platts calculations based on China's customs data showed. Platts is part of S&P Global Commodity Insights

The US used to be China's largest export destination of semi-finished aluminum products in 2017, but most of the products have been subjected to high anti-dumping and countervailing duties, resulting in a significant decline in export volume, mostly since 2018.

China exported 252,870 mt of semi-finished aluminum products to the US in 2024, making up for only 4% of China's total semi-finished aluminum products exports, according to S&P Global Market Intelligence Trade Analytics Suite data.

China exported 534,016 mt of finished aluminum products to the US in 2024, accounting for 16.3% of the country's total finished aluminum products exports, GTAS data showed.

While the US remained China's largest export destination of finished aluminum products, China's top-10 export markets collectively represented only 48% of total finished aluminum product exports in 2024.

This reflected a relatively fragmented export distribution pattern with low market concentration, sources said.

Notably, the imports of finished aluminum products from China accounted for 27.4% of the US total finished aluminum product imports by value, indicating the US' higher reliance on Chinese supply than China's export dependence on the US market, GTAS data indicated.

China's export volumes of finished aluminum products to the US will primarily hinge on demand inelasticity in the US market and the tariff absorption capacity of US end-users in the future, sources said.

Aluminum scrap

The soaring US aluminum premium could spur demand for aluminum scrap, potentially reigniting the regional scrap supply tightness witnessed in February and March in Europe, some sources said.

The Platts spot US aluminum premium hit a new record high of 54 cents/lb plus LME cash, delivered Midwest on June 3, up from 44.05 cents/lb previously, as the market continued to react to tariff news on aluminum imports.

China's imports of aluminum scrap are likely to face challenges if higher tariffs lead to a tight scrap supply in the US and Europe, which could impact their exports, industry watchers said.

Asian aluminum premium

With the US steel and aluminum tariff hikes driving aluminum spot trade premiums higher again, demand in the US market might soften to some extent.

Shipments from Canada -- the largest primary aluminum supplier to the US -- might be diverted to the European market, which could reduce Asian shipments at a time when European demand has also remained subdued, according to sources.

Reduced shipments to Europe could lead to a supply surplus in Asia, pressuring premiums, combined with moderate demand, some sources said.

Market participants are closely monitoring whether the US will grant tariff waivers to Canadian and Australian imports, a move that could reshape regional trade flows.

Platts assessed the CIF main Japanese ports spot premium for 99.7% P1020/1020A aluminum ingot unchanged day over day at $92/mt plus London Metal Exchange cash June 3.

Market participants continued to watch the quarterly main Japanese ports (MJP) pricing negotiations closely. Market expectations of Q3 MJP negotiations were reported at $120-$130/mt CIF Japan prior to the first deal being reported.

"With the announcement from Trump on the revision of tariffs to 50% for aluminum, I believe there will be a lot of confusion throughout," said a producer, sharing expectations of higher US Midwest Premiums and potential downward pressure on Rotterdam premiums as more Canadian metal is expected to flow into Europe.

In the event of lower Rotterdam premiums and overall slow European demand, "it would be difficult to attract Asian units," a trader said. "That might pressure Asian premiums further."