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US aluminium tariff changes unlikely to quickly fix supply shortfall
ING says US primary aluminium output has fallen to four operating smelters and import dependence should keep the Midwest premium supported for years.
ING Commodities strategist Ewa Manthey said Washington’s amended Section 232 aluminium tariffs are designed to encourage investment in domestic smelting, with some firms able to apply for qualifying import volumes at a 25% tariff instead of the standard 50% rate if they hit approved investment milestones.
The analysis argues tariffs alone have had limited success in rebuilding US primary aluminium production. It notes US output has steadily eroded over time, leaving the country with just four operating smelters compared with more than 20 at the start of the century, making the US heavily reliant on imported metal.
Manthey said rebuilding smelting capacity will not happen quickly because primary production depends on abundant, competitively priced electricity, along with billions of dollars in capital, long term power contracts, environmental approvals, and years of construction before new capacity can supply the market.
As a result, the strategist expects the US Midwest premium to remain well supported, and that elevated delivery costs and import dependence are likely to persist over the next several years. The program should be viewed as longer term industrial policy rather than a near term fix for the supply shortfall, she added, though it could support a gradual revival if successful.