Rio Tinto, Century Aluminum Raise US Premiums by 12%

Key Development

Rio Tinto Group and Century Aluminum Co. have increased premiums on aluminum billets in the United States by approximately 12%, a direct response to supply chain disruptions stemming from the Middle East. The suppliers raised the premium by about 3 cents per pound, or $110 per ton, over pre-conflict levels.

Market Context

The premium hike is attributed to the conflict in Iran, which has impacted commodity flows from the Persian Gulf. This region supplies nearly 20% of U.S. aluminum imports, forcing buyers to turn to a tighter domestic market where prices are already elevated.

Price and Economic Impact

This supply shift has pushed overall aluminum prices up by more than 10% since late February. Consequently, the U.S. Midwest premium, a key benchmark added to global prices for regional delivery, has surged to a record $1.1325 per pound, reflecting heightened supply pressures and costs for American industries.

Summary and Outlook

The sustained high premiums, coupled with reports of Rio Tinto pushing for multiyear contracts at these new rates, signal an expectation of prolonged market tightness. Market observers will be monitoring the downstream effects on manufacturing costs and inflationary pressures.

FAQ

Q: Why did aluminum premiums increase in the US?
A: Premiums rose due to import disruptions from the Middle East caused by the Iran conflict, which has tightened domestic supply.

Q: How much have aluminum prices risen?
A: Aluminum prices have increased by more than 10% since the conflict began, with the U.S. Midwest premium reaching a record high.

Source

Source: Investing.com