Aluminum prices diverging between America and rest of first world

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The amount of retards on this site who cant even fully think through first order effects, much less second or third order, is staggering.

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This reeks of some private equity tom-foolery.

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This probably has to do with the tariff wars

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Just looked into this - supposed to be finished before the end of the decade and more than double the current US production. That seems like things are working as intended.

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America could learn from Iceland. Iceland is a major Aluminum smelter because they get a huge amount of power from their geothermal resources. (It helps that they are a volcanic country.

The US has similar resources that are not utilized. Both in Alaska and California there are volcanic terranes.

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1. Regional premiums (the big one)
Global aluminum prices are quoted on the London Metal Exchange (LME), but physical buyers pay:
LME price + regional premium
In the U.S., that premium (often called the Midwest Premium) reflects:
Transportation costs (moving heavy metal isn’t cheap)
Storage and financing costs
Local supply/demand imbalances
That premium alone can add hundreds of dollars per metric ton versus other regions.

2. Tariffs and trade barriers
The U.S. has used Section 232 tariffs on aluminum imports at various times. Even when exemptions exist:
They restrict supply
Increase compliance costs
Give domestic producers pricing power
Less competition = higher local prices.

3. Energy costs & domestic production limits
Aluminum smelting is extremely electricity-intensive.
U.S. power costs are generally higher than in places like Canada (hydro) or the Middle East (subsidized energy).
Many U.S. smelters shut down over the past few decades.
So the U.S. relies more on imports — but with tariffs and logistics layered on top.

4. Logistics & geography
The U.S. market is far from the world’s lowest-cost producers.
Shipping aluminum from the Middle East, China, or Russia isn’t trivial.
Ports, rail, trucking, and insurance all add cost.
Europe and Asia often sit closer to large smelting hubs.

5. Contract structure & inventory dynamics
A lot of U.S. aluminum is sold via:
Long-term contracts
Warehouse networks tied to financing deals
Those structures can keep prices “sticky” and higher than spot markets elsewhere.

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