The premium for aluminium extrusion billet in Rotterdam has more than doubled to $1,100/t over the LME cash price, according to Fastmarkets data cited by Reuters on May 22. European duty-paid premiums have surged 58% since early March, and duty-unpaid premiums are up 75% over the same period — a direct consequence of the Gulf supply crisis eliminating the region's largest source of imported primary metal. (FACT: Reuters Open Interest, May 22, 2026; Fastmarkets)
The premium spike reflects a structural reality: Europe had already lost roughly 50% of its primary aluminium smelting capacity during the 2022-2023 energy crisis, when electricity prices made domestic production economically unviable. Smelters in Germany, France, Spain, Romania, and the Netherlands either permanently closed or indefinitely curtailed. By early 2026, Europe was importing approximately 60% of its aluminium requirements, with the Gulf states — primarily the UAE, Bahrain, and Qatar — supplying a significant share of those imports. (FACT: Discovery Alert, May 19, 2026; Reuters)
When Iranian strikes in late March destroyed EGA's Al-Taweelah smelter and crippled Alba in Bahrain, European buyers lost their closest and most reliable non-Chinese source of primary metal. Unlike the United States, which has some idled smelting capacity and can theoretically restart, Europe has very little spare domestic capacity to reactivate. The continent is now competing with Asian buyers for Russian, Indian, and Southeast Asian metal, while also drawing down LME stocks that are already near critical lows at 339,475 tonnes total. (FACT: Discovery Alert, LME, May 22, 2026)
The premium divergence between regions confirms the geographic unevenness of the crisis. Japanese buyers agreed to Q2 2026 premiums of $350-353/t — the highest in 11 years. US Midwest premiums have also surged. But the European premium move is the most extreme because Europe has the least domestic production buffer and the highest dependence on Gulf-origin imports. The continent's structural deficit in primary aluminium, which was already a vulnerability before the crisis, has become an acute constraint. (FACT: Reuters, Discovery Alert, Fastmarkets)
European buyers face a triple cost layer: elevated LME base price at $3,720/t, plus a record Rotterdam premium of $1,100/t, plus freight and insurance that have themselves increased due to Hormuz-related shipping disruption. Total delivered cost for prompt billet in Rotterdam is approaching $5,000/t. Procurement teams should: (1) Verify that existing supply contracts have no force majeure exposure to Gulf-origin metal — several European off-takers have already received curtailment notices. (2) Evaluate Russian-origin primary aluminium as a short-term alternative — sanctions exposure varies by jurisdiction and end-use. (3) Consider increasing recycled content where specifications allow — European scrap availability is better than primary. (4) Model the all-in cost including premium, not just the LME price, when comparing supply options. The premium is where the real cost escalation is hiding.