Aluminum sector does not move to the United States despite definitions

The comprehensive definitions of imported aluminum imposed by US President Donald Trump succeed in reshaping world trade flows and inflating costs for American consumers, but they are less than their primary goal: reviving local aluminum production.

Instead, the high costs, especially the high prices of electricity in the United States for global competitors, lead to the closure of the fuse instead of restarting.

The effect of aluminum tariffs by 25 % flagrantly visible on the aluminum market. While the standard aluminum prices on the London Metal Stock Exchange provides a global reference, the actual cost of gaining metal includes regional delivery installments.

This installment now greatly reflects the cost of the tariff itself.

In a blatant contradiction, the European JPMorgan analysts noticed that it is less than 30 % of the year to date, creating a great difference driven directly from the American trade policy.

This cost will eventually bear users, according to Trond Olaf Christowsen, Norway’s financial manager and headquarters WaterOne of the largest aluminum producers in the world. The company was previously known as the name Norsk Hydro.

“It is very likely that this will end as higher prices for us for consumers,” Christowsen told CNBC, noting that the cost of customs tariffs is “passing.” Hydro shares have collapsed about 17 % since the definitions were imposed.

The effective effect of definitions already feels a feeling Thuwal collectionA water customer makes goods equipped on top of cars. The company said it will raise prices by about 10 %, although it is making the majority of goods sold in the United States locally, as the prices of raw materials, such as steel and aluminum.

But while the customs tariff effectively leads to high prices in the United States, it has not stimulated a revival of local melting, the intensive energy process for the production of the initial aluminum.

The main barrier remains the lack of a long -term competitive force, according to the industry.

“Energy costs are an important factor in the total cost of production of smelting,” said Ami Shivkkar, the lead analyst for aluminum markets at Wood Mackenzie. “The high energy costs suffer from the American aluminum industry, which imposes discounts and closure.”

“Canadian, Norwegian and Middle East aluminum fascinations usually secure long -term energy contracts or manage captive energy generation. However, the ability of American son -in -law, however, largely depends on short -term energy contracts, and places them in a non -favorable position in everything.

The recent events that involve senior American producers emphasize this weakness.

In March 2023, Alaco Corp She announced the permanent closure to her 279,000 metric tons of intalco fuseWho has been idle since 2020. Alcoa said that the facility “could not be able to compete in the long run,” partially because it “lacks reaching competitive prices.”

Likewise, in June 2022, AluminumThe largest American -American aluminum producer, forced to do so Temporary, temporary, Huseville, Kentucky Massem -The largest producer in North American aluminum-Military Class-Citing “a direct result of high energy costs.”

Century stated that the cost of energy required to operate the facility “more than three times the historical average in a very short period”, which requires reducing it is expected to last nine to twelve months until prices are normalized.

The industry also had no rest, as the demand for electricity increased from non -industrial sources in recent years.

Christowsen of Hydro referred to the mutation of artificial intelligence and the spread of data centers as new competitors. He suggested that the new energy production capacity in the United States, from nuclear, wind or solar energy, is consumed by the technology sector quickly.

“The technology sector has a much higher ability to push the aluminum industry,” he said, referring to the double -digital margins in the technology sector compared to the low -neck margins in aluminum producers. Hydro reported 8.3 % profit margin in the first quarter of 2025, an increase of 3.5 % that I mentioned to the previous quarter, according to FactSet data.

“Our point of view, and we are building a fuse (in the United States), we will need cheap power. We do not see the possibility of the current market to get this.” “The lack of competitiveness is the reason why we do not think this will be interesting to us.”

While the failure to ignite local basic production, the customs tariff undoubtedly causes Kristenersen “to reshape commercial flows.”

When accessing American markets becomes more expensive or restricted, metals flow to other destinations.

Christophersen described a short period when high definitions in the United States are high on Canadian aluminum – 25 % of an additional tariff In addition to aluminum definitions-it made export to Europe more temporary for Canadian producers. Consequently, more European minerals would have been in its way to the American market to compensate for the demand gap that the Canadian aluminum was vaccinated.

The effect of the price extended to the prices of local scrap, which were adjusted up in line with the overwhelming West installment.

Hydro, the largest aluminum confidence in the world, uses both local scrap and Canadian primary minerals imported in its American operations. The company manufactures products such as windows and interfaces in the country through confidence, which is the process of paying aluminum through death to create a specific form.

“We buy us the scrap (aluminum). Local raw material. But it still includes scrap prices now indirectly, the cost of tariffs,” explained by Christophsen. “We are paying the cost of customs tariffs in reality, because the price of scrap adapts to the Middle West installment.”

He added: “We pay the cost of customs tariffs, but we pass it quickly, so it is the same (for us) exactly.”

The RBC Capital Markets of the success mechanism of Hydro Extrussions confirmed, “LME prices and installments are usually transferred to the customer.”

This passes occurred amid the opposite winds of the widest market, especially in the direction of the river course among Hydro customers.

RBC highlights the “Spot of Weakness The Sections of Power” in the recent Hydro results and noticed promotion to the level of guidance, reflecting the slow demand in sectors such as construction and construction.

Greg Kennedy of CNBC contributed to reporting.