NEW YORK — Aluminium consumers in the United States are clamoring for an alternative to the current Midwest aluminium premium, reacting to the premium's surge to a near all-time high this year.
American Metal Market’s latest assessment of the P1020 premium placed it at 19.75-20.5 cents per lb on Tuesday July 10, down from the more than three-year high of 22-23 cents per lb on April 10 but still more than double the 9.4-9.5-cent-per-lb range recorded at the start of this year.
Of all consumers, the beer can industry has been the most vocal about the allegedly unfair nature of the duty-paid aluminium premium.
In an op-ed penned for the Wall Street Journal in May, former Molson Coors Brewing Co chairman Pete Coors criticized the current Midwest premium benchmark, an assessment conducted by American Metal Market competitor S&P Global Platts.
A group of 32 lawmakers urged US Attorney General Jeff Sessions to “examine the issue of possible irregularities in the aluminum market, which appear to have inappropriately inflated the price of aluminum, and whether these irregularities raise antitrust concerns,” they said in a June 18 letter addressed to Sessions.
Beer Institute president and chief executive officer James McGreevy said in an interview with American Metal Market in April that a premium representing shipping costs for primary aluminium in the US should be closer to 12 cents rather than the current level in excess of 20 cents per lb.
In a proposal regarding a duty-unpaid premium (DUP) assessment dated July 6 and obtained by American Metal Market, the Beer Institute said that it is "unfair" for can sheet consumers to be forced to pay a Midwest premium that incorporates the effect of the Section 232 tariff into its calculation.
"A majority of the beer volume sold in the United States is packaged in aluminium cans and aluminium bottles, making aluminium the largest commodity risk for the industry," the Beer Institute said in the proposal. "As tariffs are taxes that hurt the economic activities and jobs our industry supports, it concerns us when anyone applies or imposes tariffs inappropriately."
A duty-unpaid assessment for Midwest aluminium transactions has not yet taken hold in the US market, with suppliers instead selling material at a Midwest premium that includes high duties in order to cash in on the enhanced profits resulting from the duties’ implementation, market participants told American Metal Market.
“The duty was put in place with the expectation that the price support would accrete to the domestic smelters in order to incentivize them to restart operations and increase capacity,” one US trader said in June.
American Metal Market has learned of DUP transactions involving primary aluminium shipped from the US to Mexico, with Mexican traders interested in utilizing these premiums. But US customers don’t appear to be buying P1020 at these lower premiums.
“Once the duty has been paid or if it is made in the US, the price will be the same,” one buyer source said.
In order to address this apparent need for a DUP, American Metal Market is seeking feedback on a proposal to launch an assessment of the US aluminium duty-unpaid premium, allowing for a four-week consultation period ending on Monday August 13. The DUP would be assessed once per week on Tuesday.
The pricing notice can be found here. To provide feedback on this proposal, or if you would like to provide price information by becoming a data submitter, please contact aluminium reporter Kirk Maltais at email@example.com. Please add the subject heading FAO: Kirk Maltais, re: DUP aluminium premium.