Hawesville, KY – On May 10, factory workers are riding along an aluminum pot at the Hawesville factory in Century Aluminum Company in Hawesville, Kentuck.
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Radical prices on imported aluminum imposed by US President Donald Trump succeed in reshaping global trade flows and inflating costs for American consumers, but are not below their main objective: to revive national aluminum production.
Instead, the cost increase, in particular soapping electricity prices in the United States compared to world competitors, leads to foundry closings rather than restarting.
The impact of 25% aluminum rates is clearly visible on the physical aluminum market. While aluminum reference prices on the London Metal Exchange provide a global reference, the real cost of the acquisition of metal implies regional delivery premiums.
This bonus now largely reflects the cost of the price itself.
In striking contrast, European premiums were noted by JPMorgan analysts as being more than 30% of the year up to date, creating an important divergence directly led by American trade policy.
This cost will ultimately be borne by downstream users, according to Trond Olaf Christophersen, Norway financial director HydroelectricityOne of the largest aluminum producers in the world. The company was once known as Norsk Hydro.
“It is very likely that it will end as higher prices for us consumers,” CNBC told CNBC, noting that the price cost is a “pass-through”. Hydro's shares collapsed about 17% since prices were imposed.
The downstream impact of the prices is already felt by Thule groupA hydro client who makes cargo boxes mounted on cars. The company said it would increase prices by around 10%, even if it manufactures the majority of goods sold in the United States locally, because prices of raw materials, such as steel and aluminum, have increased.
But while prices actually lead to an increase in prices in the United States, they have not stimulated a renewal in the inner fusion, the process with high energy intensity of primary aluminum production.
The main barrier remains the lack of access to long -term power at a competitive price, according to industry.
“Energy costs are an important factor in the overall cost of production of a foundry,” said Ami Shivkar, principal aluminum market analyst of the Wood Mackenzie analysis company. “High energy costs afflict American aluminum industry, forcing cuts and closures.”
“Canadian, Norwegian and the Middle East aluminum foundries generally ensure long-term energy contracts or operate captive electricity production facilities. However, the ability of American foundries,” has largely completed short-term electricity contracts, placing it in disadvantage, “added Shivkar, noting that energy costs for aluminums $ 550 had a CFAADIAN.
Recent events involving major American producers highlight this vulnerability of power.
In March 2023, Alcoa Corp announced the permanent closure of its 279,000 Metric Tons Intalco Smelterwhich has been inactive since 2020. Alcoa said that the installation “cannot be competitive in the long term”, in part because it “lacks access to a power at a competitive price”.
Likewise, in June 2022, Aluminum of the centuryThe largest producer of American primary aluminum has been forced to Temporarily at the slowdown in its massive Hawesville, Kentucky Smelter – The largest military quality aluminum producer in North America – citing a “direct result of the rowing of energy costs”.
Century said the power cost required to manage the installation had “more than tripled the historical average in a very short time”, requiring a reduction which should last from nine to twelve months until prices are normalized.
The industry has also had no respite because the demand for electricity from non -industrial sources has increased in recent years.
Christophersen of Hydro underlined the boom of artificial intelligence and the proliferation of data centers as new competitors for power. He suggested that the new energy production capacity in the United States, nuclear, wind or solar, is quickly consumed by the technological sector.
“The technology sector, they have a much higher capacity to pay than the aluminum industry,” he said, noting high two-digit margins in the technological sector compared to the often low margins to a figure in aluminum producers. Hydro declared a beneficiary margin of 8.3% in the first quarter of 2025, an increase compared to the 3.5% he declared for the previous quarter, according to FostSet Data.
“Our point of view, and for us to build a foundry (in the United States), we would need cheap power. We do not see the possibility on the current market to obtain it,” added the CFO. “The lack of competitive power is the reason why we do not think it would be interesting for us.”
While not going to light the interior primary production, the prices undoubtedly cause what Christophersen called a “reshuffle of commercial flows”.
When access to the American market becomes more expensive or limited, metal flows to other destinations.
Christophersen described a brief period when American prices exceptionally raised on Canadian aluminum – 25% additional rates above specific aluminum rates – have made export to Europe temporarily more attractive to Canadian producers. Consequently, more European metals would have made their way on the American market to compensate for the gap of the demand canceled by Canadian aluminum.
The impact of prices has even extended to the interior prices of the scrap, which adjusted online with the Midwest bonus inflamed at prices.
Hydro, also the largest aluminum extruder in the world, uses both national scrap and Canadian primary metal imported in its American operations. The company manufactures products such as window frames and facades in the country thanks to extrusion, which is the process of aluminum thrust through a designed to create a specific form.
“We buy scrap (aluminum). A local raw material. But the prices of the scrap metal now include, indirectly, the cost of the price,” explained Christophersen. “We pay the price cost in reality, because the rebuilding price adapts to the Midwest bonus.”
“We pay the price cost, but we transmit it quickly, so it's exactly the same (for us),” he added.
RBC Capital Markets analysts have confirmed this passing mechanism for hydro extrusions activity, saying that “LME prices and generally higher bonuses will be transmitted to the customer”.
This pass occurred in the middle of the wider market opposite, in particular downstream among Hydro customers.
RBC underlined that “the weak point remains the extrusion divisions” in the recent results of Hydro and noted a demotion of the advice, reflecting slow demand in sectors such as construction and construction.
– Greg Kennedy of CNBC contributed the reports.
