What’s Next for US and Mexico Aluminium? Key Insights From Fastmarkets’ Market Outlook Webinar

Why It Matters

The tightening market and shifting tariff regime force manufacturers and traders to reassess pricing, sourcing and inventory strategies, directly affecting cost structures in North‑American aluminium‑intensive industries.

Key Takeaways

• Middle East supply shocks lift global aluminium premiums, hitting Mexico hardest
• Billet and primary foundry alloy markets face unprecedented tightness
• Scrap aluminium becomes a strategic, tariff‑free hedge against supply risk
• New US tariff rules favor US‑origin aluminium for Mexican downstream buyers
• Volatility expected to persist through 2026 as inventories stay low

Pulse Analysis

Geopolitical turbulence in the Middle East has exposed the fragility of the global aluminium supply chain, especially for regions reliant on Gulf Cooperation Council exports. The GCC accounts for roughly 9% of worldwide output, and recent disruptions have forced producers to redirect shipments toward higher‑margin Asian and European markets. This reallocation has amplified regional premiums, with Mexico feeling the brunt due to its heavy import dependence. As primary smelter capacity tightens, billet and primary foundry alloy (PFA) prices have surged, prompting downstream users to scramble for alternative sources.

Compounding the supply squeeze, recent adjustments to the U.S. Section 232 aluminium tariffs have reshaped cross‑border trade dynamics. A flat 25% duty now applies to most aluminium‑containing goods, while fully aluminium products face a 50% rate, and U.S.-origin aluminium processed abroad enjoys a reduced 10% tariff. These changes make U.S.-produced metal more attractive for Mexican manufacturers, who can import the metal, fabricate domestically, and ship finished goods back to the United States at a lower duty. Simultaneously, scrap aluminium, exempt from the tariffs, is emerging as a strategic hedge, offering regional availability and mitigating exposure to geopolitical and shipping disruptions, though technical constraints limit its short‑term substitution capacity.

Looking ahead, industry participants should anticipate continued price volatility and inventory pressure through 2026. The convergence of constrained primary supply, evolving tariff structures, and divergent low‑carbon aluminium premiums across regions underscores the need for diversified sourcing strategies and heightened inventory buffers. Embracing recycled aluminium where feasible can provide a cost‑effective, tariff‑free buffer, while investing in supply‑chain resilience—such as alternative logistics routes and multi‑source contracts—will be critical for manufacturers seeking to navigate an increasingly unpredictable market landscape.