The US Midwest premium reached a record $400 per tonne, reflecting the compounding effect of 2025 aluminum tariffs on an already tight market. Unlike typical premiums covering freight and insurance, the current premium includes a significant tariff component that increases proportionally as LME prices rise.
Harbor Aluminum analysts estimate the pure logistics component should be around $86/t, meaning the remaining $314/t is tariff-related and market tightness. The US has just four operating aluminum smelters, with domestic production covering less than 30% of demand. Canada accounts for 70% of US imports, and while Canadian metal faces different treatment, global tightness means Canadian producers command higher prices.
The situation creates a two-tier market where US buyers pay a substantial premium over international peers, affecting industries from automotive to beverage packaging. Aluminum is up 19% year-to-date, driven by the Iran conflict and Hormuz Strait disruptions. US buyers face structural disadvantage in global procurement.