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Hawesville, KY – May 10 plant workers go to aluminum potlin at the Hawesville Aluminium Century Aluminium in Hawesville, China, Wednesday, May 10, 2017.
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The sweeping tariffs imposed by US President Donald Trump on imported aluminum are remodeling global trade flows and blowing the costs for US consumers. But they do not correspond to their main goal: to revive domestic aluminum production.
Instead, the rise in expenses, especially the increase in electricity prices in the US relative to global competitors, leads to the closure of melting, not to restart.
The effect of aluminum tariffs on 25% is very visible in the physical aluminum market. While the aluminum benchmark for the London Metal Exchange provides a global certificate, the actual cost of acquiring metal includes regional delivery awards.
Now this award largely reflects the tariff price.
On the contrary, European prizes were noted by JPMorgan analysts as more than 30% lower than the year, creating a significant divergence that is directly conditioned by the US trade policy.
According to Trond Olaf Christian, this cost will be applied by Trond Olaf Christophersen users HydroOne of the largest aluminum producers in the world. The company was previously known as Norsk Hydro.
“It is very likely that this will end with higher prices for US consumers,” Christopher CNBC said, noting that the tariff price is “passage”. Hydro shares have fallen apart by about 17% since tariffs have been imposed.
Exposure to tariffs down the flow already felt Thule Group. The company said it will increase the prices by about 10%, although it produces most goods sold locally, as raw material prices such as steel and aluminum were shot.
But while tariffs effectively lead to raising prices in the United States, they have not pushed the revival of internal melting, the energy consumer process of production of primary aluminum.
What will it take to revive the US plates?
The main barrier remains lack of access to competition, long -term power, according to the industry.
“Energy costs are a significant factor in the overall cost of melting production,” said AMI Shivarch, the chief analyst at Analytics Wood Mackenzie aluminum markets. “The high cost of the US aluminum plague, forcing reduce and close.”
“Canadian, Norwegian and Middle Eastern aluminum plates usually provide long-term energy contracts or work in captivity. Aluminum scales were approximately $ 550 in price comparing the Canadian plates.
Recent events involving major American manufacturers emphasize this vulnerability of power.
In March 2023, Alcoa Corp announced the constant closure of one’s 279 000 Metric Tons Intalco -PepperWhich has been hugely in 2020. Alkaa said the object “cannot be competitive in the long run,” partly because “there is not enough access to the power of a competitive price.”
Similarly, in June 2022, The century aluminumThe largest producer of the main aluminum in the US was forced Temporarily idle his massive hawesville, kentucky -The most of the aluminum aluminum manufacturer in North America, reference to a “direct result of rapid energy expenses”.
Century stated that the cost of the power required to manage the object is “more than three times in a very short period”, which requires a reduction, which is supposed to last nine -months until the prices are normalized.
Competition with the technology sector
The industry also had no respite, as the demand for electricity from non -industrial sources has grown in recent years.
Christopher Hydra pointed to the boom of artificial intelligence and the distribution of data centers as new competitors for power. He suggested that the new technological sector quickly consumes new energy production opportunities in the US, from nuclear, wind or solar energy.
“The technological sector, they have a much greater ability to pay than the aluminum industry,” he said, noting that the high double-digit stock sector reserves compared to the often low aluminum producers. According to FACSET, Hydro reported 8.3% of the profit in the first quarter of 2025, which increased compared to 3.5%, which was reported in the previous quarter.
“Our view, and in order to create a swim (in the US), we will need cheap power. We do not see the opportunity in the modern market to get it,” the financial director added. “The lack of competitive force is the reason we don’t think it will be interesting for us.”
If it does not occur in home primary production, the tariffs indisputably cause that Christfersen called the “reshuffle of trade flows”.
When access to the US market becomes more expensive or limited, metal streams in other directions.
Christophersen described a short period when exceptionally high American tariffs on Canadian aluminum – 25% of additional tariffs In addition to aluminum tariffs, exports to Europe are temporarily more attractive to Canadian manufacturers. Thus, more European metals would have made their way to the American market to replenish the gap of the demand released by Canadian aluminum.
Metal metal “indirectly” suffered from tariffs
The impact on prices has even spread to the prices on internal scrap metal, which were adjusted up in accordance with the Midwest Tariff Prize.
Hydro, also the world’s largest aluminum extruder, uses both domestic scrap and imported Canadian main metal in its US operations. The company produces products such as window frames and facades in the country through extrusion, it is the process of promoting aluminum through a stamp to create a certain shape.
“We buy us a scrap (aluminum).” We pay the tariff price in reality, because the scrap price adjusts to the Middle West. “
“We pay the tariff price, but we quickly pass it on, so it’s really the same (for us),” he added.
RBC Capital Markets analysts have confirmed this HYDRO Extrajus Business Mechanism, saying that “usually higher LME prices will be transferred to the customer.”
This passage occurred against the background of wider market winds, especially down the Hydro clients.
In recent results, Hydro RBC emphasized that the “weak place remains” extrusion units “and noted a decrease in recommendations that reflects the sluggish demand in sectors such as construction and construction.
– Greg Kennedy and Sylvia Omar brought to CNBC.
