Volatile aluminium price to affect US domestic aluminium finished products manufacturers

The US domestic aluminium finished products manufacturers such as automakers and can makers have been in real distress over the past few months on increasing volatile aluminium price range across the world.

Series of events like the United States’ tariffs on imported aluminium and steel, followed by the sanctions on Rusal blew a storm to create price upheaval. In the US, the aluminium price jumped highest to 26 per cent in April and remained 12 per cent higher since January. If this price rise sustains, it could affect the prices of aluminium extrusions and rolls, which in turn, would pass on a great impact on the end-user sector with a maximum usage of aluminium, including transportation, construction, electrical and consumer goods.

From February 16 to March 23, 2018, the demand for aluminium from US manufacturers stood strongest in more than last 10 years. During this period, the Institute for Supply Management’s Purchasing Manager’s Index (the PMI) showed US manufacturing activity at 60.8, well above the 50 mark that indicates growth or decline. But supply remained unsettled during the same period of time due to market uncertainty around aluminium and steel tariffs.

In fact, when the United States announced 10 per cent tariffs on imported aluminium on 8^th of March, the regional price differential of aluminium soared in the country by 11.8 per cent, compared to a typical day-to-day price move that ranges between -2 per cent to + 2 per cent. This price differential reflects the regional cost of logistics, such as truck freighting and handling charges. It also importantly reflects regionally specific supply and demand condition in the US.

Following the latest updates on the US tariffs, which are likely to be imposed on several countries, the import cost of aluminium will become 10 per cent more expensive. The US domestic aluminium finished products manufacturers like automakers, can manufacturers would be a maximum hard-hit as they will have to pay the tariff, as well as the higher Midwest Premiums.