Europe sees flood of Canadian aluminum as US tariffs bite

Aluminum producers in Quebec are sending more of the metal used to make cans and car parts to Europe as US tariffs make their shipments more expensive for American customers.

The US market accounted for 78% of aluminum exports from the Canadian province in the second quarter versus 95% in the first quarter. Europe’s share rose to 18% from just 0.2%, according to S&P Global Market Intelligence.

The data are the latest indication of the disruptive impact of tariffs in North America’s highly integrated market. US President Donald Trump first reinstated a 25% tariff on aluminum imports in March, then doubled the levy in June.

Sprawling processing plants owned by Rio Tinto Group, Alcoa Corp. and Aluminerie Alouette Inc. mean that Quebec represents about 90% of Canada’s aluminum-making capacity, with the US as the province’s natural buyer given the close proximity.

Rio Tinto declined to provide shipment data. Bloomberg reported last month that the firm has curbed exports to the US and instead started buying supplies from rivals and reselling it to American customers due to tariffs from the White House.

Alcoa announced in its second quarter earnings report that it has diverted about 100,000 metric tons of aluminum shipments from Canada to destinations other than the US, such as Europe, but did not comment further upon request.

Alouette, North America’s largest aluminum smelter, which is 40% owned by Rio, shipped 57% of its production to Europe in the second quarter. In the first quarter, that number was just 4%.

“Shareholders are continuing their efforts to develop new alternatives to mitigate the effects of the current situation and maintain Aluminerie Alouette’s long-term competitiveness,” the company said.

For Canadian producers, Europe has offered a buffer against the loss-making US market over the summer, Jean Simard, head of the Aluminium Association of Canada, told reporters in Montreal Monday.

“It’s an easy call. You ship anything you can to Europe,” he said. “As the price builds up into the US, you can expect metal to come back to the US market.”

Trump’s tariffs have pushed US aluminum prices well above global levels. The so-called US Midwest premium – the amount added to global price benchmarks to deliver the metal to that region – jumped 82% since early June.

In Europe, the duty-paid, in-warehouse Rotterdam premium dropped from 14.3% of the London Metal Exchange at the start of the year to 9.1% last week, because of the increased supply, according to Platts.

“My interest is whether or not this is a paradigm shift in how the trade is going to flow, or just a short-term effect,” said Jason Kaplan, S&P Global’s nonferrous metals analyst. “The concern is actually that it’s going to be Chinese material being diverted into Europe. But in fact, maybe it’s Canadian material.”

(By Mathieu Dion)