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The primary aluminium market in Mexico has been facing low spot liquidity amid caution over tariffs, which is putting downward pressure on imported premiums, with some companies reducing capacity and others trying to be less dependent on the US, market participants have been telling Fastmarkets over the month of July.
“We are seeing few transactions in Mexico in the primary aluminium market. Few people are making purchasing positions. Besides, in the last weeks, some producers in Mexico are reducing capacity,” a seller source said to Fastmarkets.
“It’s difficult to understand where the premiums are in Mexico right now. We are seeing few transactions and low activity. I’m talking to buyers for some contracts for 2026, but on the spot basis, we are not seeing many deals. The scenario of the tariffs does not bring a lot of clarity. It’s not a matter of who has better prices, it’s the fact that there’s no spot market and some companies are reducing capacity. The biggest activity we are seeing is clients that want long-term contracts. Nothing on a spot basis,” a second seller source said.
A Mexican producer said the premiums might decline, because consumers of primary aluminium in Mexico are trying to secure material at lower levels. Also, some are reducing capacity to push the markets lower, the producer said.
“We are not being impacted a lot by the tariffs, so we are still buying primary aluminium for the next month on a spot basis, but some companies in Mexico are being very impacted. It’s not easy to find customers in other countries. Many of us are stuck in the US, there’s nowhere else we can go to. It takes years to find new customers,” the Mexican producer told Fastmarkets.
A second Mexican producer highlighted that the market in Mexico is also oversupplied because of the tariff situation: “We had long inventories for a while before the tariffs were implemented.”
“Without a clear sign or timeline of a trade deal with the US, there is a high likelihood that the Mexican aluminium market can stay in limbo, with the potential of more downside emerging,” Fastmarkets’ aluminium analyst Andy Farida said.
In March, Fastmarkets launched assessments for the aluminium P1020A premium, cif Mexico; the aluminium 6063 extrusion billet premium, cif Mexico; and the aluminium low-carbon differential P1020A, cif Mexico.
Mexico’s diverse sourcing landscape, spanning the US, India, the Middle East, Africa, Vietnam, Indonesia and Canada, among others, presented an urgent need for accurate pricing tools.
Fastmarkets assessed the fortnightly aluminium 6063 extrusion billet premium, cif Mexico at $380-450 per tonne on Tuesday July 29, unchanged since June 17, when it widened downward from $400-450 per tonne.
Meanwhile, the aluminium P1020A premium, cif Mexico was assessed at $300-360 per tonne on Tuesday, also unchanged since June 17, when it narrowed downward from $300-380 per tonne.
Fastmarkets assessed the monthly aluminium low-carbon differential P1020A, cif Mexico at $0.00-38.00 per tonne on Tuesday, widening upward from $0.00-37.50 per tonne a month earlier.
Mexico does not engage in primary aluminium production due to the absence of domestic ore reserves, so the country relies solely on imports. Meanwhile, Mexico is still very dependent on the US as the majority of its value-added products and secondary aluminium production goes to the US.
According to data from the Mexican government, the countries with the most international sales of unwrought aluminium to Mexico in 2024 were the United Arab Emirates (19.8%), the US (19.1%), South Africa (17.2%), Canada (10.1%) and India (8.43%).
In 2024, the countries with the most international purchases of unwrought aluminium from Mexico were the US (81.4%), Venezuela (5.56%) and Spain (5.04%).
However, according to ITC data compiled by Fastmarkets’ research team, US imports of alloyed material from Mexico have slumped, mostly remelt scrap ingot (RSI).
The fall and the consequent downward line in the graph followed the tariffs announcements this year:
After the tariffs, some market participants are looking to diversify their exports, mainly to Europe and Asia, in order to sell scrap and secondary aluminium to new places and be more independent from the US, sources have been telling Fastmarkets since May.
“The profile industry prepared itself and stocked up before the tariffs. The construction sector is also not doing well in Mexico and is facing difficulties. But they are all looking for new markets to export,” a Mexican producer source said.
On July 12, Trump announced that he will charge Mexico a tariff of 30% on Mexican products sent into the US, separate from all sectoral tariffs.
The 30% rate levied is an increase in the original 25% fentanyl tariffs imposed. Despite the setback, Mexican President Claudia Sheinbaum remained optimistic about the trade relationship between the two countries. “We are in constant communication, and we trust we will reach an agreement between now and August 1,” Sheinbaum said during a daily press conference on July 14.
August 1 marks the end of the pause in the reciprocal tariffs. The US’s Section 232 tariffs on steel and aluminium, as well as automotive tariffs, are not part of the trade talks.
“The market in Mexico is waiting for a negotiation between Trump and the Mexican President. They are hopeful for a deal. So I feel that some players from the aluminium and mainly the steel sector in Mexico are still waiting for the country to get a deal for the Section 232 tariffs, so they will get a lower tariff than the current 50%,” a trader source said.
After the communication on July 12, the US has already had a trade deal with Japan and the EU.
“Events around the world suggest that a trade deal can be achieved in Mexico, like US vs Japan and the US vs the EU. The template of a flat 15% tariff on everything is applicable and can be replicated here. But we think Section 232 50% on aluminium and steel is likely to stay for the foreseeable future until the Trump administration feels significant pressure from US consumers who increasingly face higher prices of everyday goods,” Farida said.
“We suspect that upcoming trade deals with India and Canada could see a similar layout, where the blanket tariffs are significantly reduced while Section 232 remains in place. With the Section 232 tariffs unchanged, we have no reason to be bearish on the London Metal Exchange aluminium price, which has continued to push higher after the April low,” Farida added.
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