The Commodity Futures Trading Commission plans to reform US aluminum pricing and is examining whether new contracts could improve transparency. Chairman Michael Selig said American manufacturers can face prices incorporating costs that do not reflect their supply chains.
The Commodity Futures Trading Commission plans to reform aluminum pricing in the United States. Chairman Michael Selig said Friday that the agency is examining whether new contracts could improve transparency.
How US buyers pay for aluminum
Aluminum plays a key role in the automotive, aerospace, packaging, construction and defense industries. Price movements affect the broader economy by impacting company margins and potentially driving up inflation.
US consumers typically pay the benchmark aluminum price on the London Metal Exchange plus the Midwest premium. Platts, part of S&P Global, assesses that premium, which covers costs including freight, insurance and taxes.
Record premium meets four-year highs
The Midwest premium reached a record $1.19 per pound, or approximately $2,620 per metric ton, at the start of June. That was more than double the level from a year earlier, when President Donald Trump increased tariffs on US aluminum imports to 50% to promote domestic production investment.
At the same time, London Metal Exchange aluminum reached four-year highs above $3,700 because of shortages caused by the war in the Middle East. US consumers faced a combined price exceeding $6,000 per ton.
Selig orders a review
Selig said he has directed the global markets team to review these pricing mechanisms and create specific reform options to protect US markets and American manufacturers. He spoke at the annual meeting of the Beer Institute, whose members include companies that use aluminum for beverage cans.
Selig described the problem this way: "a benchmark structure poorly aligned with US physical metals markets".
Source: Investing.com
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