Aluminum US Midwest Premium reaches 90 cents/lb for the first time

The US Midwest Premium for primary aluminum has reached 90 cents/lb for the first time as US 50% tariffs have led markets to head into 2026 with low import volumes and shrinking inventories.

The Platts spot 99.7% P1020 US Aluminum Transaction Premium was assessed at 90.30 cents/lb plus LME cash, delivered Midwest, net-30-day payment terms, on Dec. 15. Platts is a part of S&P Global Energy.

This assessment, also known as the Midwest Premium, was 1.80 cents/lb higher than the previous record that was reached on Oct. 31 and almost four times higher than levels seen a year ago.

The pricing surge has been primarily driven by 50% US tariffs on Canadian imports of primary aluminum. Canada accounted for 70% of US primary aluminum imports in 2024, according to S&P Global Market Intelligence data.

Despite the new record-high premium level, there is a growing sense in the markets that tariffs on Canadian metal may be lowered in the coming months.

"We are watching very closely to see not if, but when that tariff rate is adjusted," the executive director for the DC-based SAFE Center for Strategic Industrial Materials, Joe Quinn, told Platts.

"I think there is a broad consensus throughout the industry and even policy sectors that 50% tariffs will do more harm than good."

Shortly after the 50% aluminum tariffs were implemented on June 4, many in the US aluminum industry warned the steep duties would lead to demand destruction if maintained for a prolonged period.

The USMCA Trade Agreement, signed by US President Donald Trump's first administration in 2018, is also undergoing a mandated review process. The three major trading partners are due to re-evaluate the agreement by July 2026, with tariffs expected to play a major role in negotiations.

As US aluminum import volumes shrink, markets have had to rely heavily on stockpiled inventories.

"The latest estimates put US domestic warehouse stocks of aluminum at low levels, around 250,000 metric tons, or about one month's consumption, with further declines anticipated," S&P Global Energy CERA aluminum analysts wrote in a report published on Nov. 26.

Tight US supplies are being strained amid the irregular market dynamics.

"The market is weirdly short," a producer told Platts. "It's not a busy time of the year, [there] should be plenty of metal, yet we are seeing spot inquiries."

While the historically high US aluminum premiums are pressuring end-users, such as the auto and construction sectors, prices have reached a point where exports to the US are becoming economically viable.

On Dec. 3, aluminum giant Alcoa said a Midwest Premium at around 88 to 90 cents/lb covers the cost of the tariff and logistics.

The premium is more likely to go back down to 87 cents/lb than it is to rise to $1/lb, a trader told Platts, "but 90 to 91 cents is not out of the realm of possibility. It just won't have a lot of room to go up from there."