Harbor Aluminum says Midwest premium has room to grow

A news analysis piece published the second week of June by Reuters sees recycled-content aluminum producer Matalco as one likely beneficiary of tariffs being imposed an aluminum imported into the United States.

The June 9 report, which Reuters correspondent Pratima Desai says is based on conversations with four industry sources, also identifies primary metals producer Century Aluminum as a company poised to grow its profits if a 50 percent tariff on imported aluminum remains in place.

Matalco, which is based in Canada and now half-owned by global mining and metals firm Rio Tinto, has several recycled-content-aluminum production plants in the United States.

In Matalco’s case, it can benefit from the lack of a 50 percent tariff on inbound aluminum scrap, providing its United States facilities with global and domestic access to feedstock without dealing with that high tariff burden.

The increased value of aluminum scrap in the U.S., however, has not escaped the notice of the global metals market or speculators who follow it.

In the same report, Desai notes the Midwest premium (a price mechanism used to cover intrinsic aluminum scrap costs such as freight and handling) has hit a record 62.5 cents per pound, or $1,377 per metric ton, the week starting June 9.

On its website, Texas-based consulting firm Harbor Aluminum calculates the Midwest premium for the P1020 aluminum alloy had doubled in a week amid the new Section 232 tariff of 50 percent on aluminum imports announced by President Donald Trump.

The Reuters report also refers to Harbor Aluminum, saying the consulting firm has calculated the Midwest premium would have to rise to 70 cents per pound, or $1,543 per ton, to fully reflect the 50 percent tariff.

Desai says even companies for poised to benefit from the president’s protective measure, unintended consequences still could lurk.

“Some sector players are worried that Trump's move from June 4 to hike the tariffs to 50 percent, from 25 percent, could push prices so high that demand starts to weaken,” Desai says.

In the meantime, the report indicates aluminum scrap imports into the U.S. have started to rise.

“Data from information provider Trade Data Monitor shows U.S. scrap aluminum imports rose more than 30 percent to 201,968 tons in the first quarter of this year [compared with] the same period in 2024,” Reuters says.

One of Desai’s sources indicates the high Midwest premium allows U.S. recyclers to bid more for scrap compared with buyers outside the U.S. since they can sell it to a melt shop at a higher price.

At the same time the Midwest premium has been rising, a comparable premium in the European market has dropped more than 50 percent to $170 per ton since January on expectations some global producers will divert primary metal to Europe to avoid U.S. tariffs, according to Desai.