Canada is pushing more of its aluminium towards Europe to make the most of higher premiums on offer, after its neighbour the United States imposed a 50% tariff on the metal last year.
A loss of Middle East volumes due to the Iran war has hit Europe hardest and intensified competition with the U.S. for low-carbon supply, driving prices to extreme levels, with policy and prices determining where scarce aluminium is shipped, analysts, traders and aluminium industry sources said.
Disruption in the Middle East, which accounts for 9% of global aluminium smelting capacity, has upended trade flows far beyond the Gulf, industry sources said.
An ensuing tug-of-war is playing out in regional physical market premiums U.S. and European buyers pay above the London Metal Exchange benchmark for aluminium, which is used in everything from cars and beer cans to building materials.
“We are in a situation where the Europeans and the Americans are competing for limited aluminium units,” said Bank of America analyst Michael Widmer.
Duty-paid aluminium premiums in Europe have surged 73% since the start of the Iran war to a record $621 a metric ton earlier this month, while the U.S. Midwest premium last week hit an all-time high of $1.16 per lb, or $2,557 a ton.
Gregory Wittbecker, president at Wittsend Commodity Advisors, estimates the U.S. Midwest premium needs to rise to at least $1.20 a lb or $2,645 a ton for Canadian producers to divert supply back from Europe.
With LME prices around $3,670 a ton, U.S. consumers are paying $6,200 a ton for their aluminium while in Europe the cost has jumped to $4,300 a ton.
“The European premium is an incentive for Canadians to push metal east,” said Wittbecker.
NETBACKS MAKE EU ATTRACTIVE
The U.S. was traditionally the default destination for aluminium from Canada, which exported a total of nearly 2.6 million tons of unwrought aluminium metal and alloys last year, Trade Data Monitor figures showed.
But after U.S. President Donald Trump imposed tariffs on imports, Canadian producers began to divert metal to Europe.
TDM data shows Canadian aluminium accounted for 54% of U.S. imports in the first quarter of this year, down from 63% in the same period last year and 75% in the first three months of 2024.
One reason for this is the so-called netback to producers, which refers to how much profit is actually made after deducting transport, tariffs and other costs from the selling price.
“When comparing U.S. and EU prices from an export perspective one has to shave off the portion going to the U.S. Treasury in tariffs to get to comparable netbacks,” Jean Simard, president of the Aluminium Association of Canada, said.
“This is why the EU option remains attractive to Canada, adding pressure on the U.S. market,” Simard added.
Canadian aluminium exports to the European Union ranged between 6% and 40% of the monthly totals between April 2025 and March 2026, compared with near zero in the first quarter of last year, TDM data showed.
Data for Canada’s April aluminium exports is not yet available, but industry sources expect it to confirm the trend of rising exports to Europe and falling shipments to the U.S.
EUROPE’S ALUMINIUM DEFICIT
Bank of America’s Widmer estimates Europe faces a 5.6 million-ton aluminium deficit in 2026, versus a global shortfall of 2.2 million tons and a 3.8 million-ton U.S. deficit.
Last year, Europe imported around 1.3 million tons or 21% of its primary and alloyed aluminium from the Middle East, TDM data shows, and its loss comes in addition to the phasing out of Russian aluminium by the EU and the mothballing of South32’s Mozal smelter in Mozambique.
Even before the Iran war began with U.S.-Israeli strikes on February 28, Canadian shipments to Europe jumped 276% from 2024 levels to more than 590,000 tons last year, while deliveries to the U.S. fell 25% to around two million tons, TDM data shows.
(Reporting by Pratima Desai and Polina Devitt)
