The weekly Davis Index for both P1020A and 6063 billets moved lower over the week on news of the removal of the US tariffs on Canadas’s primary aluminum imports.
The Davis Index for P1020A fell by 1.6¢/lb to 13.6¢/lb delivered US under the three-month LME Aluminum contract on Monday, while the 6063 billet premium inched down by 0.6¢/lb to 7.1¢/lb above the P1020A premium.
The removal of tariffs and their impact on aluminum premiums have left the market confused about the way forward. For now, most US buyers are happy to lower their acquisition costs, though Canadian suppliers remain concerned about exporting too much to the US and facing new tariffs in the future. The two conflicting views are likely to create uncertainty in the market.
When the US reimposed tariffs on Canadian aluminum in August, market participants argued that Canada’s retaliation could be more harmful to the US, impacting aluminum pricing, and the short- and long-term economic recovery. They prompted the US to remove tariffs since a strong aluminum supply chain in North America will be vital for the continent’s geopolitical future. Despite the US’s reversal, many believe this move was politically driven and less about the economic impact.
The three-month LME aluminum contract closed on Monday at $1,793/mt, up by $5.50/mt from $1,787.5/mt on September 14.