Canadian aluminum finds home in Europe amid volatile US market

Large downside risk and a volatile London Metal Exchange, which has caused tariff fluctuations in the US aluminum market, means Canadian metal is still arriving in Europe despite a record-high US Aluminum Midwest Premium, market participants told Platts at the S&P Global Aluminum Symposium in Miami.

The implementation of 50% tariffs on US aluminum imports reshaped the global aluminum supply chain, as the US market relied on stockpile drawdowns rather than imports to cover demand for much of 2025.

Canadian metal, with its duty-free status and attractive low-carbon qualities, found a natural home in Europe, with 326,562 metric tons of P1020 arriving in Rotterdam over January-November 2025.

However, with US stockpiles drawn down to critical levels, the Midwest Premium has reached unprecedented highs in a bid to attract metal back into the market.

Platts, part of S&P Global Energy, last assessed the spot US aluminum transaction premium at 103.95 cents/pound plus LME cash, delivered Midwest, Feb. 3, steady day over day amid no changes to fundamentals and ongoing concerns over low stocks.

Multiple market participants said the current price is about 5 cents/lb above replacement value; however, a risk premium has been embedded to incentivize imports in the unpredictable market environment.

"Latest estimates for US domestic warehouse stocks of primary aluminum stand at 150,000-175,000 mt, down from 200,000 mt in late December 2025," S&P Global Energy CERA aluminum analysts wrote in a report published Jan. 22.

"The US market is operating on a hand-to-mouth basis," a trader said. "Nobody wants to commit to large volumes because of the huge downside risk if the tariff changes."

"We've reduced our holdings in the US to de-risk," a second trader said. "We want to avoid physical risk because of the huge downside in the US; any risk is instead through derivatives."

A producer source said that volatility in the LME aluminum price was another source of concern, as the cost of the tariff fluctuates accordingly.

"On paper, the US market is better, but the LME is high, so the tariff is high," the source said.

Considering these factors, Canadian volumes have continued to find their way to the European market.

Large volumes of Canadian units arrived in Rotterdam at the tail end of 2025, as market players rushed to import units ahead of the EU's Carbon Border Adjustment Mechanism.

However, at least two ships/month were heard still arriving in Rotterdam due to a mix of contractual obligations and the aforementioned risks associated with the US market.

Platts assessed the European duty-paid P1020 aluminum premium at $340-$360/mt in-warehouse Rotterdam on Feb. 3.

Shipping back west

European demand has gotten off to a lackluster start this year, with many consumers already well-stocked.

The high Midwest Premium has therefore incentivized some owners of Canadian metal in Europe to ship it back west to the US market.

This is particularly the case for those who bought metal when the LME aluminum price, and therefore tariff cost, was at a lower level.

Market participants are keeping a keen eye on this flow and any hint of change to the current tariff level.

"We've had to get comfortable with being uncomfortable," a market participant said.