Global aluminum ingot prices tumble in Q2 2025 amid tariffs, oversupply, and weak demand

The pressure intensified in July as Washington doubled tariffs on aluminum imports to 50 per cent, a move that disrupted supply chains and reshaped price dynamics.

North America: tariffs, stockpiling, and demand weakness

In North America, the Aluminium Ingot Price Index fell nearly 18 per cent in the second quarter compared with the first, reflecting the combined impact of oversupply and weaker demand. Importers had accelerated stockpiling ahead of the Section 232 tariff hike in June, leaving inventories both in domestic markets and in LME warehouses. 

Midway through the quarter, producers benefited from temporarily lower alumina and energy costs, but by late June sharply higher tariffs drove import costs upward, compressing smelter margins.

Automotive and construction activity lagged, while buyers increasingly relied on just-in-time procurement to limit exposure to price volatility. According to the Aluminum Association, aluminum demand in the US and Canada fell 4.4 per cent year-on-year in the first quarter, a decline that persisted into the second quarter. 

Producer shipments from US and Canadian facilities dropped 6.7 percent year-to-date through April. Imports had surged 40.9 percent in the first quarter of 2025, while scrap inventories grew 18.9 percent year-on-year in April, aggravating the oversupply situation.

By July, prices staged a modest rebound. The enforcement of 50 per cent tariffs pushed the Midwest duty-paid premium higher as buyers accelerated purchases before trade costs escalated further. Optimism surrounding domestic consumption-boosting policies added to the recovery in sentiment.

Asia-Pacific: AI and automotive leads to weak demand 

The Asia-Pacific Aluminium Ingot Price Index fell 8.1 per cent in the second quarter of 2025, dragged down by weak downstream demand and steady supply. 

In Japan, aluminum rolling companies like UACJ and MA Aluminum are dealing with higher costs for raw materials, transport, and labour. They tried to increase processing fees, but many customers pushed back because retail demand is still weak. Car makers kept production steady by relying on just-in-time supplies, but slow activity in construction and manufacturing created problems. Also,  China's patchy recovery and weak exports added to the drag on demand.

Japanese spot aluminum prices slid 5 per cent week-on-week early in the second quarter, underscoring buyers' cautious stance. Port inventories fell to around 316,700 tonnes by the end of June, down 4.3 per cent from early quarter levels, but the decline was insufficient to significantly ease oversupply.

Car sales in June surged 21.3 per cent year-on-year to about 393,160 units, boosting consumption of aluminium sheet and extrusions. At the same time, demand for high-purity aluminium foil for AI data centers gained momentum. These factors helped drive a modest uptick in July prices, supported by tightening supply and stronger demand from autos and the technology sector.

Europe: oversupply drives steepest losses

Europe registered the steepest decline, with the Aluminum Ingot Price Index tumbling about 20 per cent quarter-on-quarter in the second quarter of 2025. 

German smelters operated near capacity, while additional production is expected by late 2025, keeping supply elevated. LME and social warehouse inventories remained high throughout the quarter.

Costs for raw materials and energy stayed stable, but that gave little relief because the market was flooded with supply. Demand fell as carmakers and builders relied on existing inventories instead of ordering more. In Germany, residential construction improved slightly, but the recovery was too small to shift the weak overall market.

By mid-July, European aluminum prices edged higher in line with gains in LME aluminum cash settlement prices. However, sentiment remained weak as persistent oversupply continued to overshadow the market.

First-quarter gains and outlook for H1 2025

The second-quarter weakness stood in contrast to a stronger first quarter of 2025, when prices rose across regions. The Asia-Pacific average was USD 2,587 per tonne, down 8.1 per cent month-on-month and 6.1 per cent year-on-year, while Europe averaged USD 3,089 per tonne, a drop of 15.7 per cent month-on-month and 10.2 per cent year-on-year.

North America averaged USD 4,166 per tonne, down 15.7 per cent month-on-month and 6.4 per cent year-on-year. In India, the price stood at INR 245,590 per tonne, down 11.2 per cent month-on-month but still up 0.5 per cent year-on-year.

Looking forward, the LME aluminum outlook for 2025 is cautiously optimistic. A Reuters poll in January projected aluminum as the best-performing base metal of the year, with prices expected to rise 6.3 per cent year-on-year to around USD 2,573 per tonne, within a forecast range of USD 2,400 per tonne to USD 2,700 per tonne. Analysts suggested that a potential supply shortfall later in the year, coupled with structural demand from EVs, energy storage, and infrastructure, could provide the foundation for a recovery in global aluminum prices.

Note: This article is published in accordance with an article exchange agreement between Mysteel and AL Circle.