Alcoa(US:AA)2025-07-19 14:57Summary 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.