US imports in February disappoint

Total imports of unwrought aluminum in February were down nearly 19% to 209,698 metric tons compared with 258,443 metric tons in January. That represents roughly two weeks of US consumption, which is inadequate.

Unwrought aluminum imports originating from Canada totaled 121,988 metric tons versus 155,596 metric tons in January. Imports from virtually every major seaborne origin were down, with the exception of Argentina, which rose 6,624 metric tons.

Why This Matters

Midwest premiums from mid-November 2025 through January were consistently higher than the direct sunk cost of converting CIF duty-paid ingot delivered to Midwest duty-paid status. Our calculations show that during January, the market premium consistently ran about 10¢ per pound above direct sunk cost.

The incentive was there for exporters from Canada and seaborne origins to ship metal into the United States. Why didn’t they?

We rationalized lower December and January imports by noting that most producers had finalized sales plans for those months before realizing Midwest premiums were trading above cost.

That explanation would be especially true for seaborne importers, who typically submit customs declarations two to three months prior to shipment. In Canada’s case, that could explain December’s performance. However, we would have expected some increase in January and definitely February.

The Canadian number is the most disappointing, as Canadi9an suppliers should have been able to respond more quickly than their seaborne counterparts in the Middle East, India or South America.

There may be several reasons why imports remain low:

• Canadian producers may have placed greater emphasis on selling duty-paid low-carbon metal into the EU. Customers there likely asked for quarterly commitments of tonnage, requiring first-quarter allocations.
• During the fourth quarter of 2025, Canadian producers may have sold reasonable blocks of 2026 physical to traders who took pre-bills and left the metal in Canada. A pre-bill is a process in which the producers tenders a holding certificate to the trader as the negotiable document for payment. The trader pays against the holding certificate but does not physically move the metal from the smelter and may move it to an off-site warehouse near the smelter. Some smelters require such movement to recognize revenue on these sales.

These trader holdings may not have begun moving into the US market during January and February because of liquidity concerns and a desire not to flood the market with too much metal.

The current Midwest premium structure remains fragile, in our view, with premiums moving higher on relatively light volumes.

Traders appear aware of this dynamic and are being careful not to push excessive metal into the market and potentially depress reported premium trades.

What’s next? Premiums are going higher

The US market has a real problem. It is effectively out of metal.

Reported stocks are under 200,000 tons. That leaves little margin for logistical disruptions such as weather events in Canada, customs delays and similar issues.

Seaborne imports have faced similar problems in the past 72 hours, with the Iran conflict breaking out. That could make the Strait of Hormuz inaccessible, potentially halting exports of Gulf metal to the United States.

In our earlier piece on the Iran conflict, we noted that India could help replace seaborne imports.

However, the question remains when Canada will return to its historical role as supplier of roughly 70% of US needs. In February, Canada supplied just 58% of tons imported.

India will need time to ramp up shipments. Canada remains the only short-term solution to replenish depleted domestic inventories.

Physical traders holding pre-bill stocks in Canada are aware of this and are very confident in their positions. We expect physical premiums to remain strong and potentially move higher.

European buyers are facing similar challenges with Middle Easta supply. That could push Rotterdam duty-unpaid and duty-paid premiums higher.

In turn, higher European premiums will alter Canadian netback calculations.

We will discuss those dynamics in a subsequent article this week.