Week in Review: A market on edge

What happened this week:

• The White House signed a new Executive Order (EO) raising the aluminum tariff from 10% to 25% on all countries importing aluminum into the U.S., effective March 12, 2025. The details on which specific products are impacted are still pending in the Annexes.
• Midwest Premium (MWP) surged to 38.85¢/lb this week, jumping nearly 10¢ in just a few days as traders held back and liquidity remained tight. This rapid increase is putting pressure on buyers, with some wondering how much further it can go.
• The LME aluminum cash to 3-month spread remains in a steep backwardation (at $13b per mt), reinforcing short-term tightness in the physical market.
• Heavy producer forward selling on the LME in January suggests producers don’t believe these high prices would last. If they expected further upside, they wouldn’t be hedging at these levels.
• Industry M&A activity is heating up, as companies evaluate strategic acquisitions and carve-outs in the secondary aluminum sector. A major failed sale of Real Alloys to Hydro opened up the opportunity of dividing the asset, with some players looking to bring scrap supply in-house and others eyeing expansion opportunities. The rumor mill is that Novelis and also EGA have shown some interest.
• We spoke with ADI and published an article on their growing role in the market. With new domestic capacity coming online, they are focused on securing scrap supply and navigating shifting trade policies. Their new scrap-fed facility is set to commission by late March, further adding to the evolving U.S. landscape. They are definitely one to keep an eye on.