(April 8): Rio Tinto Group and Century Aluminum Co hiked premiums on a key semi-processed aluminium product in the US by about 12% in recent weeks after the Iran war disrupted imports from the Middle East, according to people familiar with the matter.
Both major US suppliers raised the premium on aluminium blocks known as billets by about three cents a pound, or US$110 a tonne, above pre-war levels, said the people who asked not to be named discussing private commercial matters. Rio is also pushing customers to accept multiyear contracts with the higher rate, one of the people said.
Rio Tinto and Century Aluminum declined to comment.
The elevated premium is the latest ripple effect from the Middle East conflict that has upended the flow of commodities from the Persian Gulf. The region accounts for nearly a fifth of US aluminium imports and disruptions are driving American buyers to source aluminium in a higher-priced domestic market that is already experiencing tight supplies.
Added premiums on billets will weigh further on US buyers and end consumers, who already face the highest prices for the lightweight metal after the Trump administration imposed 50% tariffs on aluminium imports.
The moves by Rio and Glencore plc-backed Century Aluminum signal that producers are leveraging Middle East supply disruptions to push up prices for US buyers. Before the war, US manufacturers were already paying the highest aluminium prices in the world due to the Trump administration’s tariffs on foreign imports.
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“The situation in the Gulf continues to impact an already volatile price environment for the US and global aluminium industry,” Charles Johnson, head of industry group Aluminum Association, said in an emailed statement. “Companies are working to adjust by shifting supply chains, shipment routes and, in some cases, metal sources.”
Prices of the metal used in appliances, beverage cans and automobiles have surged more than 10% since the Iran war broke out in late February. The so-called US Midwest premium — the amount added to global benchmarks to deliver aluminium to that region — is at a record US$1.1325 a pound.
Aluminium futures on the London Metal Exchange fell as much as 1% to US$3,443 a metric tonne on Wednesday, after the US and Iran agreed to a two-week ceasefire and Tehran pledged to reopen the Strait of Hormuz.
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Producers typically also apply a product premium on semi-processed and value-added products on top of the Midwest premium, which varies by supplier, contract and the product.
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