The US Trade Representative (USTR) has said the European Union, Argentina, Australia, Brazil and South Korea will be exempted from the US Section 232 tariffs on steel and aluminium imports - at least temporarily - with other countries in line to begin negotiations. These countries will join Canada and Mexico who have also won temporary exemptions.
“The US Midwest premium will see some dilution with more exemptions. The US premiums have also been overhyped. If US premiums come down, Asia premiums should follow,” a Singapore-based trader said.
The US Midwest aluminium delivered spot premium has risen since the beginning of this year, with the increase picking up pace in recent weeks since US President Donald Trump announced that he would impose a 10% import tax on aluminium and aluminium imports. The premium was at 19-20 cents per lb on Tuesday March 20, up from 9.4-9.5 cents per lb at the beginning of the year.
Japanese aluminium premiums have in turn followed the trend with the benchmark second-quarter main Japanese ports (MJP) aluminium premium recently settling at $129 per tonne, up 25% from first quarter premiums of $103 per tonne.
Spot premiums in the rest of Asia have also followed suit, with premiums in South Korea rising $10 per tonne to $120-130 per tonne on fca basis on March 20, according to Metal Bulletin’s assessment.
“Asia aluminium premiums will come down if more countries are exempted,” a Japan-based trader said, adding that there could be exemptions for countries in the Middle East as well.
The United Arab Emirates was reported in newswires to have asked the US for exemption from its aluminium and steel tariffs as well.
But other market participants noted that while there was the possibility of further exemptions from the US import duties for other countries, there remain uncertainties to the US Section 232 developments including import quotas for exempted countries and whether these countries could be permanently exempted.
The impact of the United States' Section 232 aluminium import tariffs on Asian aluminium premiums could be limited if the US exempts more countries from the import taxes, market participants suggested.