US Aluminum Market Faces Squeeze From Renewed Tariffs

US Aluminum Market Faces Squeeze: Tariffs and power constraints intensify concerns over supply and rising prices. Investors should be cautious about volatility in commodity markets due to these developments.

Date: 17-03-2025

AI Rating: 4

The report details significant developments affecting the US aluminum market. **Tariffs on Aluminum Imports**: President Trump has restored a 25% tariff on aluminum imports, impacting key trading partners like Canada, Mexico, and the EU. This tariff is already pushing physical market premiums higher, as evidenced by the near 60% surge in the U.S. Midwest duty-paid aluminum premium since the start of 2025, exceeding 40 cents per pound. **Supply Constraints**: The report highlights the critical issue of energy constraints that make it impossible to onshore aluminum production in the US. With aluminum smelting being six times more power-intensive than AI data centers, the inability to produce domestically at scale could lead to an even larger supply squeeze. The Aluminum Association's remarks about the reliance on Canadian imports underscore this vulnerability; Canada supplies 70% of aluminum imports to the US. Additionally, the executive from Norwegian aluminum producer Hydro points out that the US does not have adequate domestic capacity to meet growing demands, intensifying concerns over supply vulnerability. **Market Volatility**: Increased tariffs and international tensions are expected to mess with market stability. Analyst Jeff Currie predicts that volatility in commodity markets will rise, causing uncertainty among investors. Investors may hesitate to allocate funds in an environment perceived as too volatile, which could dampen future investments in the sector. Overall, the analysis indicates both immediate and long-term challenges for the U.S. aluminum market that could influence stock prices related to companies in this sector.

Stocks: AA NUE RYI