The Aluminum Monthly Metals Index (MMI) remained sideways, rising by a modest 0.5% from September to October. Meanwhile, the price of aluminum remains in an uptrend, supported by a growing number of factors.
Novelis Oswego Fire Challenges U.S. Supply
A massive fire at Novelis’ Oswego facility took a significant cut out of U.S. aluminum capacity. The September 16 event caused extensive damage throughout the facility, rendering its hot mill unusable until early 2026. The company also declared a force majeure on automotive, beverage and container stock shipments.
Most consequential to the U.S. market is the fact that the plant produces roughly 40% of the aluminum sheet used by the auto industry, totaling around 350,000 metric tons. While Novelis is currently working to minimize supply disruptions for its major customers, Ford’s shares dropped in the immediate aftermath of the fire.
Novelis’ parent company, Hindalco Industries, owns rolling plants in Europe, Brazil and South Korea. These will offer alternate sourcing options until Oswego returns. However, as offshore imports are now subject to a 50% duty, securing that material will come at an additional cost.
U.S. Aluminum Prices Rise Following Fire
The Oswego fire also shifted the overall outlook for U.S. aluminum prices. Prior to the event, the market was preparing for the end-of-year slow season. As such, market conditions appeared relatively stable to slightly softer, and certain service centers expected the Midwest Premium to moderate as a result.
But in the wake of the Oswego outage, service centers noted that conversion costs rose across U.S. mills. Meanwhile, the Midwest Premium climbed to a new all-time high, hitting $0.77/lb as of October 6. The premium now exceeds the levels most market participants predicted following the implementation of U.S. tariffs.
Those same tariffs have made U.S. supply disruptions significantly more consequential. Outages, be they planned or unplanned, do not typically have a meaningful impact on the price of aluminum. While this was in part due to the heavy supplier concentration for auto sheet, Oswego’s outage absolutely did.
Tariffs Make U.S. Disruptions More Consequential
Outside of a sharp spike in January due to buyers looking to beat tariffs, aluminum imports have trended lower throughout 2025, tightening domestic supply. Data from the Department of Commerce shows aluminum sheet imports from February to August fell 3.69% compared to the same period in 2024.
The decline is even more significant across aluminum in general, with total imports falling 10.17% during the same period. The slowdown in imports echoes sentiments among brokers and master distributors who have noted hesitancy toward long-term offshore contracting in recent months.
Even with lower import levels, the U.S. remains a net importer of aluminum, meaning the market requires offshore supply to meet demand. However, tariffs have seen buyers increasingly search for domestic producers to secure materials. While some of this behavior stems from tariff cost pressures, numerous supply shocks in recent years have led many procurement organizations to prioritize supply security and risk mitigation.
The sharp irony of these collective efforts means that supply disruptions in the U.S. are now much more consequential to market conditions. This, in turn, presents an ongoing volatility risk to the price of aluminum.
Can the Aluminum Price Uptrend Last?
Alongside a rise in domestic premiums, exchange prices remain strong. For example, LME three-month aluminum prices appreciated by an additional 2.61% last month, reaching their highest level since March during the first week of October. This ascent echoes the upside price action seen among other base metals, as copper, zinc and tin have also reached multi-month highs in recent days.
Like other base metals, the Fed’s recent rate cut saw the U.S. dollar index soften, leading commodities that trade inversely to it, like metals, to rise as a result. However, ongoing inflationary pressures are likely to see the Fed take a more tempered approach in the coming year.
Meanwhile, exchange stocks are on the rise despite China’s aluminum output cap. Data from Westmetall showed LME aluminum inventories rebounded to their highest level since March by early October. Supply concerns have largely aided the aluminum price trend over the past few months, inspiring a bullish bias among investors. However, global demand conditions remain soft. According to data from the Aluminum Association, consumption in the U.S. and Canada fell 4.4% during H1.
While the price of aluminum continues to show an upside bias for now, absent a more significant shift in market conditions, this positive trend may be difficult to maintain in the months ahead.
The Price of Aluminum: Biggest Moves
- European 5083 aluminum plate prices witnessed the largest increase of the overall index, rising 3.79% to $4,654 per metric ton as of October 1.
- European 1050 aluminum sheet prices increased 3.74% to $3,414 per metric ton.
- LME primary three-month aluminum prices moved sideways, with a 2.61% rise to $2,678 per metric ton.
- The 3003 coil premium over 1050 Korean aluminum dropped 2.23% to $3.99 per kilogram.
- Korean commercial 1050 sheet prices declined by 2.25% to $3.95 per kilogram.
By Metal Miner
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