The EU is initiating an investigation into aluminium imports to protect its industry from an anticipated influx of low-cost imports due to US tariffs. The European Commission is expected to announce this probe following the recent 25% tariffs imposed on all steel and aluminium imports by the US.
US aluminium premiums have surged to record levels, while European premiums are declining as suppliers shift sales to Europe to avoid tariffs. The European aluminium sector, heavily impacted by an energy crisis, has seen over one million tonnes of capacity offline, although some production has resumed.
Decline In Russian Aluminium Imports
Imports of Russian aluminium into the EU have decreased following the Ukraine invasion, with Russia now accounting for about 6% of European primary aluminium imports, down from levels in 2022. The EU recently banned Russian aluminium imports, implementing a quota allowing 275,000 tonnes over one year.
With Europe’s aluminium industry already weakened by high energy costs and reduced production, the probe into aluminium imports is a decisive move to prevent a flood of redirected supply. The US tariffs have driven up the cost of aluminium stateside, making Europe a more attractive destination for producers looking to avoid the additional cost burden. This redirection is already visible in the divergence between US and European aluminium premiums, with the former climbing to unprecedented heights and the latter drifting lower.
By investigating imports, policymakers in Brussels likely aim to ensure that Europe’s aluminium market does not become oversaturated with material that would have otherwise gone to the US. If unchecked, such an influx could put downward pressure on prices, making it even harder for domestic producers—many of whom have only recently brought production back online—to remain viable.
The reduction in Russian aluminium flows to Europe is another key factor at play. Before the Ukraine conflict, Russia was a far more influential supplier in the region’s aluminium market. Now, with imports from Russia restricted and capped at 275,000 tonnes annually, alternative sources have had to step up. This has opened the door for suppliers elsewhere to move more product into Europe, reinforcing the importance of safeguarding the market from an oversupply situation.
Impact On Traders And Market Dynamics
For traders, these developments present a mix of challenges and opportunities. On one hand, the potential for a tightening of European supply through trade restrictions could support premiums in the region. On the other, the ongoing shift in global trade flows introduces uncertainty, particularly if Brussels takes further steps beyond this investigation. If the EU implements additional protective measures, reduced availability of certain grades could push differentials higher.
It will be essential to monitor how supply chains adjust in response to these moves. With the US tariffs firmly set, suppliers will continue to seek the best avenues for their metal, making pricing dynamics increasingly unpredictable. The speed at which Brussels proceeds with this probe—and whether any interim measures are taken—will dictate the near-term direction for European aluminium premiums.
Those with exposure to aluminium contracts should remain attentive to policy shifts, as decisions from Brussels have the potential to alter pricing structures and availability within weeks. A prolonged investigation could keep sentiment cautious, while swift regulatory action might spark a reaction across LME spreads.
