Highlights

  • The US Midwest premium held at 105 US cents/lb on 6 Nov, Rotterdam duty-paid was US$560-595/t on 27 Oct and Japan's spot MJP rose to about US$238/t.
  • 50% US tariffs keep the Midwest premium high; Europe's duty-paid market is tight amid US-Canada Tariff uncertainty; Southeast Asian Supply has tightened.
  • Watch US-Canada tariff talks after the midterms, Q1 2027 Japanese premium talks and whether low LME stocks keep physical metal tight.

Exchange prices are wobbling, but the extra cost of getting physical aluminium delivered in America, Europe and Japan is refusing to fall much.

What happened

The US Midwest duty-paid premium held at 105 US cents a pound in the week to 6 November. That works out to roughly US$2,315 a tonne on top of the LME price, computed using 2,204.6 pounds per tonne.

In Europe, the Rotterdam duty-paid P1020A premium stood at US$560 to US$595 a tonne on 27 October. That is close to the 2026 high of US$570 to US$625 set in May and well above the US$460 to US$500 seen after a sharp fall in August.

In Asia, the spot Main Japanese Port premium was put at about US$238 a tonne after several deals, edging up from US$237 earlier. The quarterly Japanese contract for October to December settled at US$255, down 35% from the third quarter's US$395.

Why it happened

The US premium is a tariff story. Washington applies a 50% Section 232 tariff to most aluminium imports, and the country runs only four primary smelters, so it relies on imported metal that must carry the duty. Trading was thin, but nothing was pushing the premium lower.

Politics could change that. The Democrats' sweep in the US midterm elections weighed on metals sentiment this week, and a US blue wave renews the prospect of tariff relief for Canada. Alcoa has warned that cutting tariffs on Canada alone would not flatten the US premium.

Europe's premium is firm because duty-paid metal is scarce. The late-October recovery has been linked to tight duty-paid supply and US-Canada tariff uncertainty, with any cut able to pull Canadian metal back into the US.

In Asia, tighter Southeast Asian availability removed low-priced offers, with some cargoes heading to China and cheap freight drawing metal to Europe.

How it plays out

The common thread is thin buffers. LME aluminium stocks were 226,850 tonnes on 10 November, leaving little exchange metal to cap regional shortages. Primary cash settled at US$3,137, US$110 above three-month metal, a sign that buyers are paying up for prompt delivery.

Winners are producers selling into the US and Europe, who collect premiums far above smelting margins. Losers are American and European fabricators, whose all-in metal bill stays high even when the LME price dips.

Demand is not helping. Japanese Demand is described as weak and South Korean buying as hand-to-mouth, so Asian premiums rest on supply rather than appetite.

Supply is slowly returning, which is the main threat to Europe and Asia. Gulf output is expected to recover to about 75-80% of pre-war levels by the first quarter of 2027, and backwardation has been linked to reduced stockbuilding by Japanese buyers. Holding metal costs money when prompt prices exceed forward prices.

Next week, watch for any concrete US-Canada tariff proposal after the elections, early offers for Japan's January to March 2027 premium, the Rotterdam assessment and LME stock draws. A tariff cut is the main risk to the Midwest figure; recovering Gulf output is the main risk to Europe's.