Supply-side uncertainty, global trade tensions weigh on sentiment amid new US Aluminum Midwest Premium highs

In the days immediately following US President Donald Trump's doubling of steel and aluminum import tariffs to 50% from 25%, nonferrous metals market players expressed various concerns about shifting fundamentals during an industry event June 2-5.

With Midwest Premium values up nearly 15% from June 4-- the day the increased duties took effect -- to the most recent assessment on June 9, several traders and consumers said they anticipate demand destruction, although not until closer to October of 2025. Other common sentiments included uncertainty over long-term demand planning; mixed perspectives on performance of end-use sectors; skepticism around the pace of domestic supply expansion; and changes in global trade flows.

Even with the tariffs on imports, one consumer said, the US will continually need to source material from other countries.

"It's not going to fix anything," the source said of tariffs, adding "we're so reliant on imports."

As market participants wait and see whether the 50% tariff rate will stick, overall macroeconomic uncertainty makes it increasingly difficult to gauge demand and make purchases accordingly, sources said.

"It's going to be different planning for next year," a producer said. "We'll keep an eye on demand."

Uncertain H2 dynamics

Demand destruction is likely to occur in the automotive, building and construction sectors, according to the same consumer source. Current sentiments around sector performance varied: One trader mentioned aerospace performing better relative to the automotive and cans sectors, and the same producer source mentioned slowdowns observed in the electric vehicle market.

"We are concerned about a slowdown in automotive in the second half [of 2025]," a second producer said.

Volatility in global trade policies has spurred some changes to aluminum flows, sources said. Some vessels from South America have been canceled, according to a second consumer, due to the elevated risk of bringing in new material with the increased duties. Meanwhile, the first producer source said they are shipping very little material to the US amid strong Canadian demand. Canadian tons are instead moving to Mexico and Europe, a second trader said.

While aluminum maker Emirates Global Aluminum recently announced a $4 billion investment in a primary aluminum smelter to be built in the US state of Oklahoma, multiple consumers expressed doubt over the facility coming to fruition. No energy agreement has been signed, and the facility will therefore have steep competition for its energy needs, a third consumer said.

"I do not believe that will happen," a third trader said regarding EGA reaching an agreement in the next six months. "It is a lot of downside risk."

Aluminum chain price trends

Midwest Premium values first hit a record high on June 2 at 44.05 cents/lb, rising to new highs each consecutive day June 3-6. The June 6 assessment at 68 cents/lb over LME average, delivered US Midwest, marked the most recent record high, with the value softening to 67 cents/lb June 9.

The currently assessed level is nearly triple that of early 2025: Platts assessed the Midwest Premium at 23.35 cents/lb on Jan. 2.

From May 30-June 6, Midwest Premium values rose more than 75%, Platts data showed. Indicative values heard throughout the week June 2-6, in the immediate aftermath of the increased tariff news, were continually bullish; some replacement cost values were notionally indicated as high as 76 cents/lb.

Another factor market participants said could weaken demand for P1020 was a loosening of scrap supplies over the past several months as many consumers were out of the spot market. Movement in the Midwest Premium transaction price has played a major role in the lengthening of the scrap market, a scrap dealer source said.

UBCs was heard quoted as low as 60% of the Platts US aluminum Transaction price in early June, versus 80% during the prior month.

This aluminum-making material is not subject to the same tariffs as other aluminum products, prompting concerns over the acceleration of already alarming outflows of aluminum scrap from Europe, the European Aluminum Association said June 4. The US Aluminum Association said in a June 5 statement that a 50% tariff on aluminum imports would damage the US sector.

A possible export fee on aluminum waste and scrap destined for the US is now among the countermeasures the European Commission is considering following the introduction of US reciprocal tariffs.

"The EU needs to introduce an export fee that applies to all destinations, not just the US, to stop scrap leakage and secure access to critical secondary raw materials," said Director General of European Aluminum Paul Voss.

Platts is part of S&P Global Energy.