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FX BANK FORECAST · COVERAGE
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Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 38 institutional desks. No promotion.
FX BANK FORECAST · COVERAGE
Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 38 institutional desks. No promotion.
Lead — The ongoing struggle for the U.S. to secure its aluminium supply highlights significant challenges tied to trade policy and domestic production capabilities. Per the full note , President Trump's desire to bring aluminium production back to the U.S. is met with notable constraints, especially given the high tariff rates currently levied against Canadian imports. U.S. aluminium demand far exceeds domestic supply, and even with tariff relief discussions ongoing, the timeline for domestic production enhancements remains lengthy. This context sets an uncertain tone leading into potential future trade negotiations and aluminium market movements.
The desk frames this situation as a significant challenge for the U.S. industrial sector, revealing the limitations of tariff-based strategies in securing critical raw materials. As highlighted by Manthey, reliance on Canadian aluminium remains high, with U.S. imports fulfilling approximately 85% of domestic needs. A 50% tariff is currently inflating costs, pushing the Midwest aluminium premium to unprecedented levels, further straining manufacturers reliant on imports.
Moreover, U.S. primary aluminium production is currently only at 750,000 tonnes annually. The potential introduction of new smelting capacities, like the proposed facility in Oklahoma, is uncertain and will take years to realize. This bottleneck in supply emphasizes the unsustainable nature of relying solely on tariffs without concurrent enhancements to domestic production capabilities.
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How firms align with this view
Aligned with the desk view
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Key takeaways
Market implications
Traders should monitor the Midwest premium for aluminium prices, currently at record levels, as an indicator of manufacturing costs. Additionally, any developments in U.S.-Canada trade negotiations could influence future tariffs and, subsequently, the aluminium market.
Risks to this view
Should a breakthrough occur in trade negotiations with Canada, resulting in significant tariff reductions, the current dynamics could shift dramatically, leading to lower import costs and impacting domestic aluminium production strategies.
Opinions Opinion by Ewa Manthey Trump wants to bring aluminium home, but it won’t be easy Published 14:14 Commodities, Food & Agri President Donald Trump says the US “desperately needs” aluminium. His comments highlight the limits of the administration’s tariff-led strategy. US manufacturers will continue to pay for the tariffs on Canadian aluminium Trump’s comments came after US-Canada trade talks collapsed.
The two countries had been close to a deal that could have cut the tariff on Canadian aluminium from 50% to 25%. The US does not produce enough aluminium to meet domestic demand and relies on Canada for much of its supply. New capacity will take years to build.
Until then, US manufacturers will continue to need Canadian aluminium – and pay the tariff on it. Canada dominates US aluminium imports Source: US Customs, ING Research "> Source: US Customs, ING Research Tariffs lift US aluminium costs The 50% tariff has pushed the Midwest premium to record levels. US consumers pay this on top of the London Metal Exchange price.
Higher premiums support domestic producer margins. They also increase costs for manufacturers that rely on imported aluminium. Tariffs push the Midwest premium to record highs Source: Platts, ING Research "> Source: Platts, ING Research The US currently produces around 750,000 tonnes of primary aluminium a year, while imports meet around 85% of domestic needs.
Restarts and expansions could narrow the gap, but new capacity takes years to permit, finance, build and ramp up. Until then, the US will continue to rely on higher-cost imports. The administration has introduced some flexibility .
Companies with approved investment plans will be eligible to import an amount of primary aluminium linked to their expected US output at half the standard tariff rate. New capacity needs power The proposed $4 billion aluminium smelter in Inola, Oklahoma, will test the US strategy. The joint venture between Emirates Global Aluminium and Century Aluminium is expected to produce 750,000 tonnes of primary aluminium a year.
This would roughly double current US output and make it the first new primary smelter built in the country in almost 50 years. Power will be central to the project’s economics. Electricity can account for 30-40% of primary aluminium production costs, while smelters need a continuous supply.
Inola is expected to require around 1.2 gigawatts of electricity, roughly equivalent to the consumption of 900,000 US homes. The local utility says new generation would meet this demand without burdening existing customers, but a power agreement has not been finalised and will require regulatory approval. The project has also faced local opposition over emissions, land use and electricity costs.
Aluminium competes with data centres Century sold its idled Hawesville smelter in Kentucky to data centre developer TeraWulf earlier this year. The smelter had been idled since 2022 because of high power costs. The site, which has access to 480MW of power, will now be used for AI and high-performance computing.
Data centres use aluminium in power cables, cooling systems, server racks and buildings. But they also compete with smelters for electricity. The data-centre boom could increase US aluminium demand but make the metal harder to produce at home.
US aluminium capacity has fallen Source: USGS, ING Research "> Source: USGS, ING Research US will continue to rely on Canada Canada’s smelters have access to hydropower, allowing them to produce aluminium at a competitive cost and with a lower carbon footprint than many global producers. The US cannot replicate this capacity quickly. Even if Inola proceeds as planned, the country will still need imports to meet demand.
Failed trade talks mean Canadian aluminium will remain subject to the 50% tariff, keeping the costs high for US manufacturers. If the goal is to reduce US reliance on imports, tariffs are only part of the answer. The US also needs affordable power, infrastructure, long-term investment and policy certainty.
Greater recycling could reduce import requirements, although secondary aluminium cannot replace primary metal in every application. Until that capacity is built, manufacturers will continue to rely on Canadian aluminium and pay more for it. Bringing aluminium home is possible.
But tariffs alone will not do it. Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument.
Read more Aluminium Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download In this opinion Tariffs lift US aluminium costs New capacity needs power Aluminium competes with data centres US will continue to rely on Canada Author Ewa Manthey Commodities Strategist Ewa Manthey is a Commodities Strategist based in London. She joined the bank in September 2022 and covers the entire commodities complex, with a particular focus on the metals markets. She has…
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