All About Aluminum - Mar '25 Forecast

Another month, and another write up about tariffs. Believe me, there are other things occurring in the aluminum world but all are dwarfed by the size, scope, and impact of these tariffs. To make matters worse, there doesn’t seem to be a concise plan on how these tariffs will be applied across the aluminum products. I’ve tried to stay abreast of the situation as our company imports a lot of aluminum scrap (particularly from our northern and southern neighbors) and even as late as the morning of the first tariff wave, I was reading conflicting messages from various trade groups and research firms on how aluminum, particularly scrap, would be handled. I’ll get to some of what I’ve learned a little later in this column. Losses in office productivity from March Madness don’t hold a candle to tariff chaos.

But first, let’s review all the tariffs in play. If you have a hard time keeping them all straight, don’t worry, you aren’t alone. Essentially there are 2 separate sets of tariffs being talked about, which I’ll refer to as Border Tariffs and Sector Tariffs.

• Border Tariffs – These batch of tariffs were born out of the campaign promises to strengthen border security and limit the flow of illegal drugs to the US. They were going to levy 25% tariffs in all imports from Mexico and Canada as well as 10% on imports from China. The one exception for Canada being energy and critical minerals would only see a 10% tariff as opposed to the 25%. Originally set to take place on February 4th, they were postponed 30 days with many experts viewing these as a bargaining chip for negotiations. It was widely believed these would never come to fruition, but they did go into effect as of the morning of this writing (March 4th), but the big question remains as to how long.

• Sector Tariffs – The sector tariffs are ones on Steel and Aluminum that were mentioned for the first time a couple hours before the Super Bowl. These tariffs would be an overhaul to the Section 232 Tariff that has been in place since Trump’s first term. Currently at 10% for aluminum and steel, tariffs on imported manufactured goods of these commodities would increase to 25% and the copious amount of exemptions that were granted previously, would all be stripped away. These tariffs are set to be enforced on March 12th.

So we know now that the border tariffs are in place and cross-border shipments have temporarily halted until more is known. The White House will be publishing the federal register on Thursday (March 6th), and at that time we will have a better handle on which items are exempt, which are tariffed at 10% and which are tariffed at 25%. I fully anticipate that there will be a lot more negotiations the next couple days and would be surprised if there wasn’t some sort of relief that took shape in the coming week.

These two tariffs mean a lot for the aluminum industry. In the month of February, the Midwest Premium rose 13.25c on the tariff chatter, accounting for more than 80% of the increase in Midwest Transaction ($1.45 up to $1.61). If both tariffs get enacted, the regional premium will continue to surge upward by another and could reach $0.65. The higher the regional premium goes, the more attractive the US becomes as a destination for international scrap. Large premium arbitrages allow foreign sellers to net more selling to US consumers despite higher logistical costs. This influx of premium induced supply tends to drive scrap spreads wider. The actual impact will vary by commodity however, with heavily spot traded items like UBC widening out much more than industrial segs (like 5052 and 6063 extrusion) that are much more prone to being sold on annual contracts and aren’t available to take advantage short term market arbitrages.

While a ton has changed with the all in aluminum price, there haven’t been any major changes in the physical scrap markets. Extrusion scrap units for billet makers remain very scarce as do inputs for common alloy manufacturers. Cansheet inputs however, which were brutal in 2024, have opened up quite a bit thanks largely to the higher premium and availability of offshore units. Warmer weather ahead and continued strength in the ferrous markets will only add to domestic aluminum supply meaning spreads could continue to widen.

Please contact me with feedback, ideas for future topics, or offerings on aluminum scrap. I can be reached at 440-813-6325 or michael.anderson@schupan.com.