African trade flows may shift further away from the US after President Donald Trump announced a slew of new tariffs, the head of Citigroup’s regional office said https://t.co/nCTgPand4A ...

Summary of Key Points from the Conference Call Industry Overview - The conference call focused on the **aluminium and copper industries** in the context of recent US tariffs and trade flows, particularly in Europe and North America [1][2][3]. Aluminium Insights - **US primary aluminium imports** decreased by **15%** from 2024 levels in April and May, primarily affecting Canadian volumes due to tariffs impacting consumer demand [2][12]. - The **Midwest premium** for aluminium is currently around **68 cents/lb**, needing to rise to **70-75 cents/lb** to incentivize flows to the US [2][20]. - **US aluminium scrap imports** surged by **35%** from March to May compared to 2024, driven by high-quality scrap to support rolling mills [2][27]. - The **market share** of Canadian aluminium has dropped from **70%** in 2024 to **63%**, while the UAE's share increased from approximately **11%** to over **20%** [13][16]. - The **Midwest premium** is close to pricing in the **50% tariff**, indicating a potential increase in buying activity as US inventories are low [19][22]. Copper Insights - **US refined copper imports** have nearly tripled year-to-date from 2024 levels, primarily from seaborne sources, but have slowed recently due to impending tariffs [3][34]. - A **front-loading** of **400 kt** of refined copper has occurred, providing a buffer against the COMEX-LME spread, but semi-fabricated product imports have been slower [3][36]. - The **COMEX-LME spread** is expected to reach **40%** by Q4 2025 and **45%** by Q1 2026 as inventory buffers are reduced [4][71]. - **US copper scrap** continues to be priced for export, with the discount for no.2 scrap offsetting the COMEX premium, indicating limited domestic processing capacity [49][50]. Market Outlook - Limited further upside is anticipated for the **Midwest premium**, but there is potential for **LME aluminium prices** to rise as US buying improves and global scrap availability tightens [4][33]. - The **tariffs** on aluminium have made it less competitive compared to copper, prompting some US can producers to explore alternative materials [33]. - **Indonesia** and **Chile** are being discussed as potential sources for exemptions from tariffs, with Indonesia's refined copper production expected to grow significantly by 2026 [63][70]. Additional Considerations - The **US aluminium industry** would require an investment of approximately **$30 billion** and **6 GW** of energy to add **4 million tonnes** of smelting capacity domestically [31]. - The **implied grade** of US scrap exports has been declining, suggesting that higher-grade scrap is remaining in the US for domestic use [57][59]. - The **tariff exemptions** and their implications continue to create volatility in the market, particularly for aluminium and copper [71][72]. This summary encapsulates the critical insights and data points discussed during the conference call, providing a comprehensive overview of the current state and outlook of the aluminium and copper industries.

Investment Rating - The report maintains a neutral rating on equities for both 3-month and 12-month asset allocations [2]. Core Insights - The US fiscal concerns are expected to increase the deficit by approximately $275 billion, or 0.8% of GDP, next year, primarily due to more generous individual tax cuts [1]. - Revenue from tariff increases is projected to offset the net increase in the deficit, with expectations of around $400 billion, or 1.25% of GDP, in revenue next year [1]. - Federal debt as a share of GDP is anticipated to rise to about 120% by 2035 from roughly 100% today, indicating a need for close monitoring of the US fiscal outlook [1]. - The report highlights a potential sharp decline in the US trade deficit with China, driven by a decrease in imports following frontloading ahead of tariffs [8]. - Global population aging is viewed as less concerning than previously thought, with healthier aging populations expected to work longer and mitigate economic drawbacks [9]. Summary by Sections US Fiscal Concerns - The House Republican reconciliation package is expected to increase the US deficit by around $275 billion next year [1]. - Tariff revenue is projected to be around $400 billion, which will likely offset the deficit increase [1]. - Federal debt is expected to reach approximately 120% of GDP by 2035 [1]. Trade Dynamics - The report anticipates a decline in the US trade deficit with China, with real goods imports increasing by 3% in April but declining by 4% in May [8]. - The annualized goods trade deficit was around $1.6 trillion in April, decreasing to $1.5 trillion in May [8]. Population Aging - Concerns about global population aging are considered overblown, as healthier aging populations are expected to work longer [9]. - The fertility rate required for long-term population stability is believed to be lower than the current global rate of 2.1, supporting continued population growth [9]. Hedge Fund and Mutual Fund Trends - The average US long/short equity hedge fund has maintained a return of 1% year-to-date, despite a challenging environment [11]. - Mutual funds have shown strong performance, with 50% of large-cap funds outperforming their benchmarks [11].