LME aluminum steadies, supported by race to beat planned new US tariffs

LONDON — London aluminum prices steadied on Friday, helped by a weaker dollar and a scramble to deliver more of the metal to the US before President Donald Trump imposes hefty new tariffs on imports.

Mr. Trump said on Thursday he would impose tariffs of 10% on aluminum imports and 25% on steel imports into the US, sparking fears of a global trade war as he risks retaliation from the likes of China, Europe and Canada.

“The market is confused as to how to digest this ( but) in the short term it’s bullish,” said Oliver Nugent, commodities strategist at ING, adding this was evident in rising aluminum premiums or surcharges for metal shipments in Japan. “We’re expecting a rush of material into the US before tariffs are implemented. Longer term the question becomes will the US draw down its existing stocks rather than import. That would be bearish.”

Three- month aluminum on the London Metal Exchange (LME) ended up 0.10% at $2,149 a ton, bucking a mostly falling trend in base metals. Aluminum on the Shanghai Futures Exchange closed down 0.10% after touching a two-week high.

The “import duty increase on aluminum products will have a small impact on China’s aluminum export and domestic market,” Argonaut Securities said in a note.

“China’s aluminum products exports to the US accounted for around 14% of its total exports in 2017 and represent only one percent of China’s total aluminum production.”

US spot aluminum premiums spiked to the highest in almost three years as buyers sought to secure metal before the tariffs come into force. A global aluminum producer has offered Japanese buyers a premium of $133 per ton for the April to June quarter, up 29% from the current quarter.

World equity markets slid further and the US dollar dropped to its lowest in more than two years against the yen on Friday as concern over a global trade war added to investor uncertainties about rising inflation and the outlook for US interest rates.

The response Europe has pledged to planned US tariffs on steel and aluminum imports is likely to stop short of triggering a trade war. Australia’s trade minister said Mr. Trump’s planned tariffs risk retaliation and could cost jobs.

Copper ended down 0.40% at $6,898 a ton, zinc closed down 1.5% at $3,355, lead closed up 0.10% at $2,448, tin ended down 0.80% at $21,475 while nickel ended down 0.20% at $13,450.—