As many of our readers are celebrating the Fourth of July, it is a good time to take a look back at some of the most-viewed stories here on MetalMiner in the second quarter of the year:

  1. Trump Drops Metals Tariffs on Canada, Mexico; What’s the Impact on Steel, Aluminum Prices?

  2. Could Spot Iron Ore be on Track for $100/Ton?

  3. This Morning in Metals: Iron Ore Price’s Rise Slows

  4. Rising Iron Ore Prices Push Some Chinese Steel Mills into the Red

  5. Taking a Closer Look at the Platinum-Palladium Price Spread

  6. A Shifting U.S. Dollar Could Impact Precious Metals Prices

  7. Aluminum MMI: Aluminum Prices Fall Despite Global Supply Deficit

  8. Is British Steel a Victim of Brexit or an Undeserving Wastrel?

  9. Alunorte’s Restart Does Not Bode Well for Aluminum Prices

  10. Stainless MMI: Stainless Prices Hold Flat

The Automotive Monthly Metals Index (MMI) picked up one point this month, rising for a reading of 87.

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U.S. Auto Sales

General Motors reported Q2 deliveries of 746,659 vehicles, marking a 1.5% decline on a year-over-year basis.

GM’s chief economist said U.S. light-vehicle SAAR for the first half of the year is expected to reach 17.0 million units.

“The U.S. economy continues to grow at a healthy pace. Jobs are plentiful and inflation remains low,” said Elaine Buckberg, GM’s chief economist. “Auto demand was better than anticipated in the first half and we expect strong performance in the second half of the year. If the Fed cuts rates, as widely expected, lower financing costs will provide further support to auto sales.”

Meanwhile, Ford Motor Co. is scheduled to announce its Q2 sales results at 9:15 a.m. ET on Wednesday, July 3.

Fiat Chrysler reported it had its best June in 14 years, posting total sales growth of 2%, tallying 206,083 vehicle sales. Ram pickup truck sales surged 56% in June to 68,098 vehicles and 179,454 vehicles in the quarter.

Total Honda sales fell 7.3% in June, while Nissan sales fell 14.9%. Hyundai sales were up 2% in June and rose 2% in the first half of the year. Subaru reported 61,511 vehicle sales in June, marking a 2.8% year-over-year increase.

Toyota sales fell 3.5% on a volume basis and increased 0.3% on a daily selling rate basis.

According to a monthly forecast released jointly J.D. Power and LMC Automotive, June retail sales were expected to fall 2.9% compared with June 2018, while total sales were forecast to drop 1.5% year over year.

Despite slumping sales this year, automakers have cashed in on higher average transaction prices. According to J.D. Power and LMC Automotive, new-vehicle prices are up 4% in the first half of the year compared with the first half of 2018.

“While the first half of 2019 is expected to deliver its weakest retail sales since 2013, the growth in prices has been nothing short of remarkable,” said Thomas King, senior vice president of J.D. Power’s data and analytics division. “Average transaction prices set a record during the first half, which has big implications for manufacturer revenues.”

GM Announces Michigan, Texas Investments

Last month, GM announced plans to invest $150 million in its Flint Assembly plant and $20 million at its Arlington Assembly plant.

At the Flint plant, the automaker aims to augment production of its Chevrolet Silverado and GMC Sierra models.

Meanwhile, the $20 million investment in the Texas plant aims to upgrade the plant’s conveyors in preparation for the rollout of the automaker’s new full-size SUVs. According to a GM release, the upgrades are expected to be completed next year.

Actual Metal Prices and Trends

The U.S. HDG price fell 6.9% month over month to $779/st as of July 1. The U.S. platinum bar price increased 1.7% to $834/ounce, while palladium surged 15.8% to $1,516/ounce.

U.S. shredded scrap steel fell 7.1% to $274/st. LME copper jumped 2.8% to $5,981.50/mt.

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Chinese primary lead ticked up 0.9% to $2,340.98/mt.

Jaguar Land Rover’s (JLR), decision to invest hundreds of millions of pounds to enable its Castle Bromwich plant in the U.K. to build electric cars, as reported by the Financial Times, is interesting on a number of levels.

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Specifically, for JLR it underlines the drastic steps the firm is being forced to take following a collapse of sales over the last 18 months. Buyers have turned away from JLR’s diesel engine lineup — some 50% of JLR’s models are diesel-powered — amid a backdrop of wider automotive sales slumps across Europe and in China.

Switching to petrol engines is but a stopgap for a manufacturer whose range is skewed heavily to larger, less fuel-efficient models.

European environmental standards will require manufacturers to meet a fleetwide average of 57 miles per U.S. gallon by 2021 – already a demanding target with high mix of diesels and a number of electric options in its range.

But with a switch to petrol and following recent suggestions by the E.U. that the limit should be ramped up to 92 mpg by 2030, JLR could struggle to survive.

So, switching to all-electric for some of its key models — like the replacement for the XJ, the flagship Jaguar saloon— is, while immensely challenging, the only viable option.

The challenge — and the source of JLR’s reluctance to build its existing all-electric I-Pace in the U.K. — has been the lack of a U.K. supply chain.

Many of the drivetrain components, like motors, were produced by third parties but are increasingly being made in-house, according to thedrive.com. The most significant factor, however, is the lack of a significant automotive battery maker in the U.K., the Financial Times reported.

Perhaps the imposition of harder post-Brexit borders with the E.U. will encourage U.K. manufacturers to establish a major battery facility at some stage in the future — or, maybe, Castle Bromwich will be the last major automotive investment in the U.K.

Either way, for now sourcing major components from Europe is a brave move, particularly with so much uncertainty around about trade terms.

From a wider perspective, JLR’s investment suggests manufacturers do not believe politicians will carry through with such threats, despite all the current political posturing over a hard Brexit. It also suggests manufacturers believe there will be some form of a softer compromise that allows low-tariff or tariff-free trade with the E.U. and, more importantly, relatively free movement of goods. That, or some solution requiring only light touch border controls that allow just-in-time supply chains to continue to operate with levels of flexibility similar to the current regime.

All other U.K. car manufacturers are either keeping their cards close to their chests while waiting to see the outcome of the Oct. 29 deadline to leave the E.U., or are actively moving to Europe by announcing investment for new models will go into mainland European plants.

JLR’s move is against the current grain and raises the question of whether it has anything to do with the level of state financial support it has received, desperate as the government is to build momentum against the prevailing tide of lost investment to the E.U.

No automotive company invests in new facilities without going cap in hand to the government to see what help it can get; typically it is 9-10%, but it won’t be long before news leaks out of quite how much JLR has secured for Castle Bromwich.

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E.U. state aid rules set limits — but in a post-Brexit world, potentially anything could be agreed.

The European steel sector is facing an existential threat based on a variety of factors, according to the president of the European Steel Association (EUROFER), who spoke at the group’s annual conference June 26.

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The issue of rising imports has been a consistent complaint of the E.U. steel industry. Steel companies in the trading bloc have argued the U.S. Section 232 steel tariffs have diverted steel, ordinarily headed to the U.S., to Europe (among other places).

“As a result of the import duties applied by the United States as of 23 March 2018 under Section 232 the US Trade Expansion Act of 1962, exporting steel to the United States has become less attractive,” the European Commission said in February. “There are already indications that, as a consequence, steel suppliers have diverted some of their exports from the US to the EU.”

Earlier this year, the E.U. imposed steel safeguards in an attempt to mitigate the issue of rising imports; even so, many E.U. steel leaders argue the safeguards have not been effective.

“These challenges have the potential to erase the whole steel industry in Europe. On the other hand, these challenges bring us a great opportunity, if we can embrace change and use it to accelerate innovation,” EUROFER President Geert Van Poelvoorde said. “In 2018, there was a record 12% rise in European imports of finished steel products, in a market that grew only 3.3%. We are grateful that the European Commission recognised the problem and took action. However, the safeguard has failed in its objective for a large part of our industry.”

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In addition to rising imports and slowing demand, Van Poelvoorde referenced the E.U.’s role in curbing emissions and regulations aimed at doing so.

“For steelmakers, there are several possible routes to decarbonisation – and various pathways to achieve this are being tested by a range of steel companies,” Van Poelvoorde said. “However, funding for these projects has to come from many different sources: to achieve decarbonisation, Europe’s steel sector cannot go it alone, it needs massive investments and cooperation with other stakeholders.”

Val Poelvoorde added costs associated with emissions compliance in the E.U. represent a “cost restraint that non-EU producers do not face.”

Copper appears to be caught in the crosswinds.

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After months of steady declines from a peak of U.S. $6,600 per ton in April, the copper price had drifted down to well below $6,000 per ton on fears of what impact the ongoing trade war between the U.S. and China would have on top consumer China.

But while trade war tensions continue to provide significant headwinds, an extending strike at Codelco’s Chuquicamata copper mine is raising concerns about supply.

The copper market is considered to be in deficit, according to Reuters, saying the global refined copper market showed a deficit of 51,000 metric tons in March, compared with a 72,000-ton surplus in February. Bloomberg cited the International Copper Study Group, which forecast a deficit of 189,000 tons by the end of this year.

Codelco’s strike has been rumbling on for 12 days now. Chuquicamata is the company’s third-largest mine, producing 321,000 metric tons last year (so over 10,000 tons have been lost so far).

Some 3,200 workers at the mine are represented by three unions. Their grievance is focused on comparable terms of employment between retiring older workers and incoming new workers. The company is holding back on the more generous terms older workers enjoy as they negotiate the severance of some 1,700 workers due to the transition from open pit to underground mine in the next 12 months.

So far, Codelco says it has made the best offer it can.

Workers, however, are not satisfied.

Negotiations are at an impasse. The union is going back to the workers later this week for an extension to the strike. In and of itself, the loss of Chuquicamata’s production is not critical for the copper market, but it heightens concerns about where supply is going to come from, as investment in new mines has been depressed for some years by excess supply and low prices.

Perversely, though, inventory has been rising.

Both the LME and SHFE have seen increases in stocks this year, although they have fallen somewhat in the last month or so. Generally, inventory levels do not suggest a market in crisis.

So, what can we make of the recent price rises: are they purely a reaction to the Chuquicamata strike and a weaker dollar boost to commodity prices, or the buildup for a move higher?

Demand, while less robust than previous years, remains fairly solid. Much of the negativity is down to fears over the trade conflict between the U.S. and China, as is the case with much of the commodity and equity markets; a resolution to that squabble would see a return of optimism and higher prices.

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Without it, though, it is hard to see significant upside to copper this year — the fundamentals are not supporting that yet. In the meantime, sentiment is king.

Chinese steel mills are caught between the proverbial rock and a hard place.

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Iron ore prices surged to their highest level in five years on the back of mine closures in Brazil and robust demand, the ABC reported.

Vale’s Feijao mine disaster, which killed around 250 people, has resulted in the loss of around 6% of seaborne supply since late January, the ABC reports.

The market is feeling the squeeze.

Iron ore inventories at Chinese ports have dwindled away to the lowest level in more than two years. The current price is approaching U.S. $120/metric ton, still well short of the record U.S. $191/ton in early 2011 or the $160/ton reached in the last big rally seven years ago. However, the current price is still rising inexorably and resulting in mill margins becoming so pressured that some producers have slipped into the red.

Chinese steel futures are reacting to the tight market with rebar prices hitting a near eight-year high and hot-rolled coil climbing to an all-time peak, Reuters reported. Steel demand from downstream sectors in China is reported to be very strong, yet finished steel prices are not rising fast enough to spare steel mills from becoming squeezed in the tight raw material supply market.

Needless to say, with delivered cost prices from Australian iron ore mines into China at around $30 per ton, Rio Tinto, BHP and their smaller brethren are making hefty margins. But in recognition of the probability that Brazil’s mine closure issues are more short term than long term, Australian miners are not investing in major new projects. Rather, they are spending cash paying down debt, making cost-saving investments and distributing surpluses to shareholders.

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Elevated iron ore prices are not expected to persist into next year. The consensus forecast is for prices to drop back into the $80-$90 range by next year, ABC reports, so Chinese steel mills’ pain is likely to be relatively short-lived.

Following consolidation in the industry and the closure of many illegal or unlicensed producers, the remaining behemoths will be able to ride out the few months of negative or poor margins in the expectation falling raw material costs and/or rising finished steel prices will come to their rescue later this year.

Several years ago, analysts and mainstream publications once speculated the yuan would eventually replace the U.S. dollar as the world’s reserve currency.

But with most commodities still priced in U.S. dollars, especially oil, the U.S. dollar has remained the world’s reserve currency.

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The U.S. dollar is also a key currency in the precious metals market.

Source: MetalMiner data from MetalMiner IndX(™), Macrotrends.net and Yahoo.com

U.S. and Chinese gold bullion prices, as seen in the chart above, move closely together. Meanwhile, they both tend to move inversely against the dollar.

In other words, as the dollar gains strength, gold prices grow weaker in both countries.

The yuan fluctuates more widely against the dollar, with little apparent impact on gold prices.

Source: MetalMiner data from MetalMiner IndX(™) and Investing.com

Here is a more typical look at the relationship between U.S. values, with gold priced per ounce, which clearly shows the inverse price relationship.

MetalMiner recently caught up with Americas Silver Corporation President and CEO Darren Blasutti regarding underlying gold and silver price trends.

Blasutti explained the transition away from oil supports gold’s bullishness. Once that happens, the rationale for holding U.S. dollars weakens greatly, while currency diversification, including precious metal purchases, will continue to make sense.

Whereas industrial metals have shown more price volatility during certain periods, gold prices have stayed relatively more stable, according to Blasutti, therefore making it more attractive for mining companies.

Source: MetalMiner data from MetalMiner IndX(™)

Gold prices have enjoyed some price support during the past year or so, but still remain lower than in the recent past. Still, prices are trading in a fairly stable sideways band and have done so, more or less, since 2013.

Historical Roots in Silver

Prior to moving into gold mining, as most other major silver companies have done to date, Americas Silver Corporation mined a mixed market basket including silver, zinc and lead.

With prices for silver quite low in the recent past, it’s difficult to justify mining the metal from a cost perspective. As a result of falling silver prices following the acquisition of two key silver projects, Americas Silver Corp. transitioned from predominantly silver mining toward lead and zinc.

Over time, the mining strategy shifted toward higher grades of lead and zinc and lower silver quality. It made more sense to take advantage of higher zinc and lead prices, while silver prices suffered a lengthy slump.

Into the foreseeable future, while silver prices remain lower, the company continues to focus on mining its lower grade silver, leaving the higher grades in the ground because the company remains bullish on long-term silver prices.

“When silver does come back, we can increase ounces quite dramatically on the silver side,” Blasutti said.

The company’s acquisition and startup of the Relief Canyon Mine, located in Pershing County, Nevada, for gold mining will transition the company from a base metals mining company back into a precious metals mining company.

“Part of the impetus to get back to precious metals was to get a commodity that we thought had less volatility,” Blasutti said. “Gold has shown to have less volatility in the last period, much more than the base metals. Base metals traded in a range and gold has traded in a range, but the range hasn’t been severe [for gold].”

Source: MetalMiner data from MetalMiner IndX(™)

So far, even with the trade war at hand, silver prices remain low.

Source: MetalMiner data from MetalMiner IndX(™)

As shown in the chart above, the gold-to-silver price ratio continues to increase toward gold.

But as pointed out by Blasutti, those remaining silver companies stand to win big once prices for the metal turn around. He pointed out the last time prices stood at around this ratio (90.3:1), silver came back.

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What This Means for Industrial Metal Buyers

Given projections for the reduction of oil use in the long-term as stricter emissions standards come into effect, demand for the dollar could decline into the future.

As demand for the dollar weakens, we can expect gold prices to rise. Once gold reaches higher prices, silver may finally follow suit, with the gold-to-silver ratio finally dropping back from current highs that strongly favor gold mine production.

Quite a bit has happened since late November, when the leaders of the U.S., Canada and Mexico signed the United States-Mexico-Canada Agreement (USMCA), the intended successor to the North American Free Trade Agreement (NAFTA) and sometimes dubbed “NAFTA 2.0.”

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More recently, President Donald Trump threatened to impose an escalating tariff, beginning at 5%, on all imports from Mexico as of June 10 if the countries could not reach an agreement on immigration enforcement. Days before the deadline, the U.S. announced it would back away from the tariffs amid a deal reached with Mexico.

The U.S. also recently lifted its Section 232 steel and aluminum tariffs with respect to imports from Canada and Mexico, one high-profile sticking point in the USMCA approval process.

The legislatures of all three countries must ratify the USMCA before it can go into effect; as such, the deal has been in a sort of limbo since the countries’ executive leaders signed the deal during the G20 Summit in Buenos Aires.

Until recently, none of the countries’ legislatures had approved the USMCA. That changed this week, however, as the Mexican Senate became the first to ratify the USMCA.

In a press conference Thursday, Mexican President Andrés Manuel López Obrador lauded the USMCA’s passage, saying the approval conveys confidence to national and foreign investors and is good for the Mexican economy.

In the U.S., President Donald Trump in public statements has continued to put pressure on the Democrat-majority House of Representatives to pass the USMCA.

The United States Trade Representative (USTR) lauded Mexico’s approval.

“The USMCA is the strongest and most advanced trade agreement ever negotiated,” USTR Robert Lighthizer said in a prepared statement. “It is good for the United States, Mexico, and Canada in a way that truly benefits our workers, farmers, and businesses. The USMCA’s ratification by Mexico is a crucial step forward, and I congratulate President López Obrador and the Mexican Senate on this historic achievement.”

In his opening statement during a Senate Finance Committee hearing Tuesday, Lighthizer called the USMCA the “gold standard.”

“It is the gold standard for rules on the digital economy, financial services, intellectual property, etc.,” he said. “It will help stop the outflow of manufacturing jobs and return many to the United States. Its labor and environmental provisions are the most far-reaching ever in a trade agreement. The agricultural chapter will lead to increased market access and eliminate unfair trading practices by our trading partners.”

Among other clauses, the USMCA includes language on labor practices (aimed particularly at lifting labor conditions in Mexico), automotive regional content rules (increasing to 75%, up from 62.5% under NAFTA) and activities of or dealings with state-owned enterprises.

Sen. Ron Wyden (D-Oregon), in testimony during the Senate Finance Committee hearing this week, applauded parts of the deal but questioned aspects related to enforcement.

“The president campaigned on ripping up existing trade deals, but the new NAFTA sure resembles the old one,” Wyden said. “That said, there are areas of meaningful progress. It goes further than before on digital trade and state owned enterprises. It takes a modernized approach to customs and duty-evasion. I commend Ambassador Lighthizer for obtaining some strong outcomes in the labor and environment chapters.

“But particularly when it comes to enforcement, there’s some hard work left to be done. Commitments from other countries aren’t any good if there’s no way of holding those countries to them. The new NAFTA retains a weak enforcement system from the old NAFTA, which was too easy on trade cheats. That’s a bad deal for American workers, particularly the enforcement of labor obligations.”

Senate Finance Committee Chairman Chuck Grassley (R-Iowa), meanwhile, touted the USMCA’s potential positive impact for U.S. farmers.

“American farmers, workers and businesses stand to benefit greatly from USMCA,” Grassley said.  “More market access for agriculture, new commitments in critical areas such as customs, digital trade, intellectual property, labor, environment, currency, and the lowering of non-tariff barriers will translate into higher wages, greater productivity, and more jobs.

“In fact, the U.S. International Trade Commission’s economic analysis found that USMCA will create 176,000 new American jobs. We shouldn’t squander this opportunity to update NAFTA, which is now a quarter century old but has been critical to the success of American farmers and businesses.”

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Now, the USMCA awaits approval from the legislatures in the U.S. and Canada.

India’s retaliatory tariff on 28 U.S. goods, including some finished metal products, has been dubbed the “fruit and nut tax” in trade circles. The facetious label, though, does not take away from the seriousness of the developing situation.

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In India and the U.S., exporters, importers, trade and industry are apprehensive about the turn this fresh step by India will take in the coming days, especially in light of the current U.S.-China trade war.

Will the move by India escalate into a similarly full-blown trade war? Or will it be used as a bargaining chip by the Indian side during the visit by U.S. Secretary of State Mike Pompeo to India later this month?

Last weekend, the Hindu Business Line reported the Indian government slapped tariffs on 28 U.S. products, including: almonds, apples, chemicals, flat-rolled stainless steel products, other alloy steel, tube, pipe fittings, screws bolts and rivets.

India’s Ministry of Finance said the decision was in the “public interest.”

Technically, it comes in retaliation to America’s imposition of a 25% tariff on steel and a 10% import duty on aluminum products in March 2018. That it took a year or so for India to go ahead with this counter was that despite announcing the counter-tariffs on June 21, 2018, the country had decided to go slow on implementing them for various reasons, one of them being general elections held earlier this year.

So why now?

The answer to that lies in U.S. President Donald Trump’s removing India from the list of nations with preferential trade treatment, just one day after a new government was sworn in in India.

Questions are already been asked in India – will the country lose more than it will benefit because of this new move?

The U.S. is India’s largest trade partner, and India sells much more to the U.S. than it buys. Last year, India imported U.S. goods worth U.S. $33 billion and exported goods worth $54 billion. Last year, trade equivalent to $54 billion was conducted between the two nations. The equation is slightly in favor of India only in the IT sector because of the outsourcing of services to Infosys and other firms.

All of this means the U.S., if chooses to do so, could hit back at India with fresh tariffs, which in turn would escalate the trade battle and, in turn, deliver a body blow to India’s already-suffering economy.

An editorial in Indian newspaper The Hindu said the Indian government has sent “a strong message that Indian is not going to be compelled to negotiate under duress.”

“To be sure, India has much at stake in ensuring that economic ties with its largest trading partner do not end up foundering on the rocky shoals of the current U.S. administration’s approach to trade and tariffs, one that China has referred to as ‘naked economic terrorism,” the editorial continues.

“The counter-tariffs have now lent the Indian side a bargaining chip that the US Secretary of State, Mike Pompeo, will have to grapple with during his visit later this month.”

To be fair, unlike countries like Canada and Mexico, India had extended the deadline for imposition of these duties eight times in the hope that some solution would emerge during a negotiation between the two nations. Earlier, India dragged the U.S. to the World Trade Organization’s dispute settlement mechanism over the imposition of import duties on steel and aluminum. India exports steel and aluminum products worth about USD $1.5 billion to the U.S. annually.

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All attention is focused on Pompeo’s India visit, even as backchannel dialogue continues in the hopes of reaching a solution in the interest of both nations.

Aluminum base prices on the London Metal Exchange (LME) have been sliding for the last couple of months, suggesting we have a market in surplus.

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So when the United States removed tariffs on imported steel and aluminum from Canada and Mexico last month, you would have expected the resulting flood of lower-priced aluminum would have driven down the Midwest Premium.

No such luck.

Despite a minor blip, it has remained stubbornly elevated at over USD $400 per ton, raising howls of protest from consumers (particularly in the beverage can market).

But before we accuse primary mills of gouging the market, let’s consider some points made by Andy Home in a Reuters article this week.

First, some context supporting the consumers’ position. Canada accounted for some 51% of aluminum supply to the U.S. market in 2018, with Australia, Argentina (who were exempted from the start) and now Mexico making up another 8%, so that nearly 60% of supply is now duty-exempt.

Yet prices have not really shifted despite jumping from $0.10/lb before the tariffs were announced to over $0.22/lb now – well above the 10% (about $0.08-$0.09/lb) that could reasonably be attributed to the tariff.

That raises the question as to what is really going on: if elevated Midwest Premiums are not really reflecting the 232 10% import tariff as many have maintained, then why do they remain elevated? Does their persistence after the tariff removal mean they may be a long-term feature of the market?

Technically the Midwest Premium has generally been explained as the cost of delivery to a U.S. consumer, largely reflecting haulage costs.

But while it is a reflection of that, it is also much more, Home suggests.

The CME contract traded volumes equivalent to almost 2.5 million tons last year, not just from trade hedging but as a market in its own right. The U.S. market remains incredibly tight. Prices aside, the loss of some 350,000 tons of supply from the Becancour smelter in Canada due to a lockout has not even begun to be replaced by domestic U.S. restarts amounting to only some 90,000 tons.

The market has continued to grow, but supply is constrained – surely that should be reflected in the LME price, you may ask?

Yes, in a fully functioning market it should be. The U.S. isn’t a market isolated from the rest of the world — so what are premiums doing elsewhere?

Rotterdam P1020 duty-unpaid premiums rose to about U.S. $100 per metric ton this month, up from $90-$95 per metric ton late last month. However, duty-paid premiums in less-traded and lower-volume Mediterranean markets, like Spain, eased slightly to U.S. $350-$360 per metric ton from a shade higher last month (not far off Midwest Premium levels, according to AluminiumInsider).

Premiums in South America are even higher, reaching U.S. $500 per ton in Brazil. The premiums are not reflecting the scarcity of metal, per se, so much as the scarcity of metal in a particular location.

But if some justification for the premium can be made, what about the elevated prices being paid by consumers despite a declining LME? Home has some thoughts for us on that, pointing to the revenue earned by suppliers in this elevated market, noting the U.S. government collected only around $50 million in tariffs.

Some of the difference, an estimated $27 million, went to U.S. primary aluminum smelters. The bigger part, $173 million, went to U.S. rolling mills. The latter, according to the article, have been pricing their can stock to include the 10% tariff, even though primary metal only accounts for around 30% of the input (the rest is scrap).

The beverage market is far from alone in this. For those consumers who do not break down the raw material, delivery premium and value-add elements of their pricing, mills have managed to push through price increases in excess of 10% on the back of less than 10% cost increases.

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Consumers, then, do have grounds for discontent.

What they do about it in the face of a still tight market for many grades is tough, but breaking out base metal, premium and gaining as much transparency as possible into the value-add is a big first step. It provides data for negotiation and a structure for analyzing price changes with greater power in the hands of the buyer.

In a difficult market, consumers need all the tools they can lay their hands on.