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The Beer Institute proclaims the current Section 232 tariffs on aluminum imports have cost the industry over $1.4 billion since 2018 and have brought no economic benefit to American consumers. These statements were asserted at last week’s public hearings on the economic impact of Section 232 import tariffs on the steel and aluminum industries. During the hearings, the US International Trade Commission heard from consumers and producers of those metals, which have been tariffed since 2018 by the Trump administration. The Beer Institute was especially vocal about the tariffs, declaring the tariffs “increase production costs, inhibit investment, and impact consumer prices.” |
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Section 232 tariffs are at the discretion of the US executive branch and are allowed for reasons of national security. Current tariffs are 10% on aluminum imports and 25% on steel imports. These tariffs were meant to reduce the flow of metals imports, thereby preventing foreign exporters from dumping cheap steel and aluminum onto the US market. AEGIS notes the cost of the tariffs has supported Midwest Transaction Price on aluminum. Reducing or eliminating those tariffs would likely reduce costs and perhaps prices in the U.S, as these tariffs are based on aluminum prices, and are built into the Midwest Transaction Price. The ITC will release findings in March 2023. The CME Midwest Premium is a premium that midwestern US buyers pay on top of the LME price and can be hedged via swaps. However, the CME Midwest Premium swap market is thinly traded, and there is no options market. Hedging in this market is tricky, so we recommend using strategically placed limit orders. Please contact AEGIS for specific strategies that fit your operations. (7/27/2022) |
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Note: Clients with AEGIS Platform access can see this and other research, plus hedge portfolio reporting and tools here. |
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AEGIS Insights |
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07/20/2022: AEGIS Factor Matrices: Most important variables affecting metals prices 07/20/2022: Interest in Hedging Cobalt is Increasing 07/07/2022: Have Copper Prices Begun to Find a Bottom? |
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7/26/2022: Why China’s economic measures may not be enough to drive up consumer demand 7/25/2022: LME won't ban Nornickel's metal as Russian firm isn't under UK sanctions -sources 7/24/2022: Column: Aluminium producers feel the margin pain as price slumps 7/22/2022: Cliffs expects automotive steel demand rebound by year-end: CEO
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Important Disclosure: Indicative prices are provided for information purposes only, and do not represent a commitment from AEGIS Hedging Solutions LLC ("Aegis") to assist any client to transact at those prices, or at any price, in the future. Aegis makes no guarantee to the accuracy or completeness of such information. Aegis and/or its trading principals do not offer a trading program to clients, nor do they propose guiding or directing a commodity interest account for any client based on any such trading program. Certain information in this presentation may constitute forward-looking statements, which can be identified by the use of forward-looking terminology such as “edge,” “advantage,” “opportunity,” “believe” or other variations thereon or comparable terminology. Such statements are not guarantees of future performance or activities.
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