Rising expectations of US tariffs weigh on aluminum

LONDON — Aluminum prices slid on Wednesday to near threemonth lows as the prospect of US tariffs were bolstered by the resignation of a key advocate for free trade, while base metals generally came under pressure from worries about a trade war.

Benchmark aluminum prices on the London Metal Exchange ( LME) ended down 2.3% at $ 2,098 a ton from an earlier $2,097, the lowest since Dec. 20.

Last week US President Donald Trump announced plans to impose a 10% duty on aluminum imports. “Nobody should be surprised by the idea of taxes on metal imports in the United States,” said SP Angel analyst John Meyer.

Europe has drawn up a list of US products from bourbon to Harley Davidson motorbikes on which to apply tariffs if Mr. Trump follows through with his plans, European Union sources said. Canada will also retaliate against any US tariffs on steel and aluminum products, its officials said.

Gary Cohn, the top economic adviser to Trump said on Tuesday he would resign, a move that comes after he lost a fight over plans for import tariffs.

“Apart from a few US steel mills and a number of US domiciled aluminum smelters, most other companies, trade and industry associations, as well as most of Congress, are all vehemently opposed,” said INTL FCStone analyst Edward Meir.

“Unfortunately for the antitariff crowd, the president does have the legal authority to impose these duties without Congress’ approval as long as he finds authority in existing statute.”

Expectations of growing surpluses of aluminum has reinforced the trend of falling discounts for the cash contract over the three- month forward, at around two-month lows of $18 a ton from a premium near $50 a ton on Feb. 19.

Rising stocks of aluminum in LME approved warehouses, up at 1.32 million tons from around 1.06 million tons a month ago, are also weighing on prices. Aluminum stocks in warehouses monitored by the Shanghai Futures Exchange are at record highs above 842,000 tons.

The price of copper closed down 0.80% at $6,950 a ton as the market looked ahead to key data from top consumer China, accounting for nearly half of global demand estimated at around 24 million tons this year.

Zinc was down 1.3% at $3,260, lead fell 2.6% to $2,375, tin slipped 0.30% to $21,375 and nickel lost 0.70% to $13,595 a ton. —