1. Event Focus: The United States plans to temporarily waive car tariffs, and the supply chain of car companies will be suspended
Recently, former US President Trump publicly stated that he is considering implementing short-term tariff exemptions on imported cars and parts to allow free riding companies to adjust their supply chains to domestic production in the United States. Although the scope and duration of the exemption are not clear, this statement quickly triggered market expectations for the easing of cost pressures in the global automotive industry chain.
Background extension
The “de Sinicization” of car companies is facing obstacles: In 2024, the amount of aluminum parts imported by American car manufacturers from China decreased by 18% year-on-year, but the proportion of exports from Canada and Mexico to the United States has risen to 45%. Car companies still rely on the North American regional supply chain in the short term.
Key proportion of aluminum consumption: The automotive manufacturing industry accounts for 25% -30% of global aluminum demand, with an annual consumption of approximately 4.5 million tons in the US market. Exemption from tariffs may stimulate a short-term rebound in demand for imported aluminum materials.
2. Market Impact: Short term Demand Boosting vs. Long term Localization Game
Short term benefits: Tariff exemptions trigger expectations of ‘grabbing imports’
If the United States implements a 6-12 month tariff exemption on imported automotive parts from Canada and Mexico, car companies may accelerate stocking to reduce future cost risks. It is estimated that the US automotive industry needs to import about 120000 tons of aluminum (body panels, die-casting parts, etc.) per month, and the exemption period may drive an increase in global aluminum demand of 300000 to 500000 tons per year. LME aluminum prices rebounded in response, rising 1.5% to $2520 per ton on April 14th.
Long term negative: Localized production suppresses overseas aluminum demand
Expansion of US recycled aluminum production capacity: By 2025, the US recycled aluminum production capacity is expected to exceed 6 million tons per year. The “localization” policy of car companies will prioritize the purchase of low-carbon aluminum, suppressing the demand for imported primary aluminum.
The role of Mexico’s “transit station” is weakened: Tesla’s Mexico Gigafactory production has been postponed until 2026, and short-term exemptions are unlikely to change the long-term supply chain return trend of car companies.
3. Industry linkage: policy arbitrage and global aluminum trade restructuring
China’s export ‘window period’ game
The export of aluminum processed products has surged: China’s automobile aluminum plate and strip exports increased by 32% year-on-year in March. If the United States exempts tariffs, processing enterprises in the Yangtze River Delta region (such as Chalco and Asia Pacific Technology) may face a surge in orders.
Re export trade is heating up: the export volume of aluminum semi-finished products from Southeast Asian countries such as Malaysia and Vietnam to the United States may increase through this channel, avoiding origin restrictions.
European aluminum companies are under pressure from both sides
The cost disadvantage is highlighted: the complete cost of electrolytic aluminum in Europe is still higher than $2500/ton, and if US demand shifts to domestic production, European aluminum plants may be forced to reduce production (such as the German plant in Heidelberg).
Green barrier upgrade: EU carbon border tax (CBAM) covers aluminum industry, intensifying competition for “low-carbon aluminum” standards in the US and Europe.
Bulk capital bets on ‘policy volatility’
According to CME aluminum options data, on April 14th, the holding of call options surged by 25%, and the price of aluminum exceeded 2600 US dollars per ton after the exemption was granted; But Goldman Sachs warns that if the exemption period is shorter than 6 months, aluminum prices may give up their gains.
4. Prediction of Aluminum Price Trend: Policy Pulse and Fundamental Clash
Short term (1-3 months)
Upward drive: Exemption from expectations stimulates replenishment demand, coupled with LME inventory dropping below 400000 tons (398000 tons reported on April 13th), aluminum prices may test the range of 2550-2600 US dollars/ton.
Downward risk: If the exemption details are not as expected (such as limited to the entire vehicle and excluding parts), aluminum prices may fall back to the support level of $2450/ton.
Mid term (6-12 months)
Demand differentiation: The release of domestic recycled aluminum production capacity in the United States suppresses imports, but China’s exports of new energy vehicles (with an annual demand increase of 800000 tons) and infrastructure projects in Southeast Asia hedge against negative effects.
Price center: LME aluminum prices may maintain a wide range of fluctuations of 2300-2600 US dollars/ton, with an increase in policy disturbance rate.
Post time: Apr-15-2025