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Top Aluminum Makers Hike US Surcharge as War Disrupts Supply
Premium on Billets Is $110 a Ton Above Prewar Levels
Rio Tinto Group and Century Aluminum Co. hiked premiums on a key semi-processed aluminum product in the U.S. 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 U.S. suppliers raised the premium on aluminum blocks known as billets by about 3 cents a pound, or $110 a ton, above prewar 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 U.S. aluminum imports and disruptions are driving American buyers to source aluminum in a higher-priced domestic market that’s already experiencing tight supplies.
Added premiums on billets will weigh further on U.S. buyers and end consumers, who already face the highest prices for the lightweight metal after the Trump administration imposed 50% tariffs on aluminum 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 U.S. buyers. Before the war, U.S. manufacturers were already paying the highest aluminum 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 U.S. and global aluminum 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 U.S. Midwest premium — the amount added to global benchmarks to deliver aluminum to that region — is at a record $1.1325 a pound.
Aluminum futures on the London Metal Exchange fell as much as 1% to $3,443 a metric ton on April 8, after the U.S. and Iran agreed to a two-week ceasefire and Tehran pledged to reopen the Strait of Hormuz.
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.
