The Davis Index for P1020A climbed on Monday amid the US tariffs on primary aluminum from Canada being firmly in place and positive market sentiment.
The Davis Index for P1020A increased by 1.4¢/lb to 15.2¢/lb delivered US under the three-month LME Aluminum contract on Monday. Simultaneously, the 6063-billet premium was 7.7¢/lb higher above the P1020A premium, up from 6.2¢/lb a week ago.
Market participants expect this to open the door for aluminum primary ingot and billets import offers. The supply for 6063 billets is tight, but the extra cost of P1020A has market participants concerned that the US now must pay more than required for aluminum, which in turn could squeeze their margins.
Moreover, the 18pc retaliatory tariffs on finished goods from the US to Canada, imposed by the latter is adding pressure on pricing. Many industry players believe this tariff battle flies in the face of the US Mexico Canada Agreement (USMCA) and should be dropped accordingly as it covers up some of the inefficiencies that many US-based primary aluminum producers have to contend with in producing ingot with older, antiquated equipment.
The three-month LME aluminum contract closed on Monday at $1,776/mt up by $19/mt from $1,757/mt on August 17.