(Bloomberg) -- President Donald Trump’s bravado on how his get-tough trade policies are helping stimulate the economy will be cold comfort for aluminum buyers in the U.S.
On Friday, Trump tweeted: “Despite the Aluminum Tariffs, Aluminum prices are DOWN 4%. People are surprised, I’m not! Lots of money coming into U.S. coffers and Jobs, Jobs, Jobs!”
While the price of aluminum is down about 7 percent since Trump announced his intention to slap shipments with a 10 percent tariff in the name of national security, they have recovered about 0.8 percent since the trade spat escalated this week.
And when the cost of delivering the light-weight metal to American buyers is included, the all-in price is about 11 percent higher than a year ago. The Midwest premium has doubled in 2018 amid fears that tariffs will curtail imports, leaving domestic metal makers struggling to meet demand.
“The global aluminum market was certainly substantially overbought on fears of Chinese supply constraints and cutbacks in production, which was exacerbated by tariff fears,” Tai Wong, the director of metals trading at BMO Capital Markets Corp., said by telephone.
“Aluminum prices have dropped materially since the tariffs were announced due more to the fact that industrial metals overall have corrected, and aluminum specifically was solidly overbought for the past six to nine months on Chinese supply constraint fears in terms of the winter shutdowns,” he said.
©2018 Bloomberg L.P.