After the United States imposed a 50% tariff on aluminum last year, Canada is now exporting more aluminum products to Europe in order to take advantage of the higher premiums in the local market. Analysts, traders and aluminum industry experts say that the war in Iran has led to a reduction in supply in the Middle East, with the impact being greatest on Europe and intensifying the competition with the United States for the supply of low-carbon aluminum, pushing prices to extreme levels. Policies and prices determine the flow of scarce aluminum.
Industry experts say that the supply disruption in the Middle East, which accounts for 9% of global aluminum smelting capacity, has gone far beyond the region of the Gulf and completely disrupted trade flows. The ensuing tug-of-war is reflected in the price increases in regional physical markets - the premiums paid by US and European buyers above the LME benchmark price for aluminum, which is widely used in everything from automobiles and beer cans to construction materials.
Michael Widmer, an analyst at Bank of America Merrill Lynch, said: "The current situation is that Europe and the United States are competing for the limited aluminum resources. Since the outbreak of the Iran war, the tax-inclusive aluminum premium in Europe has soared by 73%, reaching a record high of $621 per ton earlier this month, while the premium in the Midwestern United States reached a historical high of $1.16 per pound (equivalent to $2,557 per ton) last week."
Gregory Wittbecker, the president of Wittsend Commodity Advisors, estimates that the premium in the Midwestern United States needs to rise to at least $1.20 per pound (or $2,645 per ton) before Canadian producers will shift their supply back from Europe. With the LME price at approximately $3,670 per ton, American consumers pay $6,200 per ton for aluminum, while the cost in Europe has already jumped to $4,300 per ton. Wittbecker said: "The premium in Europe encourages Canada to transport the metal eastward."
Net returns make the EU more attractive.
Traditionally, the United States has been the default destination for Canadian aluminum. Data from the Trade Data Monitoring (TDM) agency shows that Canada exported nearly 2.6 million tons of unprocessed aluminum and alloy products last year. However, after US President Trump imposed tariffs on imports, Canadian producers began to transfer the metals to Europe.
TDM data shows that in the first quarter of this year, Canadian aluminum accounted for 54% of the US imports, lower than 63% in the same period last year and 75% in the first quarter of 2024. One of the reasons is what producers call "net return", which is the actual profit obtained after deducting transportation, tariffs and other costs from the selling price. Jean Simard, the president of the Canadian Aluminum Association, said: "When comparing the prices of the US and the EU from an export perspective, the tariff portion remitted to the US Treasury must be deducted to obtain comparable net returns." Simard added: "This is why the EU option is still attractive to Canada and puts pressure on the US market."
TDM data shows that during the period from April 2025 to March 2026, Canada's aluminum exports to the EU accounted for 6% to 40% of its monthly total volume. Last year, this proportion was close to zero in the first quarter. Canada's aluminum export data for April has not been released yet, but industry experts predict that this data will confirm the trend of increased exports to the EU and decreased shipments to the US.
The aluminum shortage in Europe
Widmer from Bank of America Merrill Lynch estimates that in 2026, Europe will face a 560,000-ton aluminum shortage, while the global shortage is 220,000 tons and the US shortage is 380,000 tons. TDM data shows that last year, Europe imported approximately 130,000 tons of primary aluminum and alloy aluminum from the Middle East, accounting for 21% of its total imports. Additionally, the EU is gradually phasing out Russian aluminum, and the Mozal smelter of South32 in Mozambique has also been idle. TDM data indicates that even before the US-Israel air strike on Iran and the outbreak of the Iran war on February 28, Canada's shipments to Europe had increased sharply by 276% from the 2024 level, exceeding 590,000 tons last year, while deliveries to the US decreased by 25% to approximately 2 million tons.
