ING’s commodities team says a partial rollback of US aluminium tariffs is unlikely to change the market. The 50% tariff on primary aluminium remains in place. The US still has limited smelting capacity and continues to rely heavily on Canadian supply.
The proposed changes are expected to focus on derivative products, not primary aluminium. ING says that would keep the Midwest premium high after last year’s tariff increase.
Tariff Scope And Market Impact
ING says tariffs have already reshaped US trade flows. Primary metal has been pushed away from the US, while scrap inflows have increased. It also notes that some Canadian aluminium has been redirected to Europe.
ING adds that exchange inventories are effectively near zero. Destocking continues, and there have been reports of large spot enquiries in Q2. It says the physical market is still tight.
ING says a rollback limited to derivatives would not meaningfully affect LME pricing and would only slightly reduce the Midwest premium. It also says global aluminium supply remains tight, inventories are low, speculative positioning is elevated, and policy risk is splitting regional markets.
Trading Implications And Regional Spreads
Based on the 2025 analysis, little has changed. The 50% tariff on primary aluminium is still the key driver in the US market. Small tariff tweaks on other products last year had little impact, as expected.
This ongoing tariff continues to support a high Midwest premium, holding around 19 cents per pound. That structural tightness keeps US physical prices above LME levels, raising the real cost of metal for US buyers. For traders, this supports long exposure to CME Midwest Premium futures, either as a hedge or as a way to position for continued domestic tightness.
Global exchange inventories also point to tight supply. LME stocks are now below 400,000 tonnes, near multi-decade lows. With inventories this low, the market can react sharply to any disruption, making price spikes more likely. One way to express upside exposure while limiting risk is to use call options on LME aluminium.
US production has not closed the gap. Annual primary smelting output is still struggling to rise above 900,000 metric tons, while demand is over 5 million tons. That leaves the US structurally dependent on imports, especially from Canada. This deficit supports a bullish view on North American aluminium prices relative to other regions.
The main trading theme remains regional price fragmentation. Strategies that target regional spreads—such as going long the Midwest premium while hedging with a short LME futures position—still look attractive. The drivers behind these trades in 2025 are still in place today.
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