SHANGHAI- Aluminum price fell on Wednesday amid concerns about the risk of a major global trade war, after US President Donald Trump’s imposition of 25 percent tariffs on steel and aluminum imports.
Three-month aluminum on the London Metal Exchange (LME) was down 0.6 percent to $2,627.5 a metric ton, down 1.3 percent from a three-week high of $2,662.50 hit on Monday when tariffs were announced.
The biggest impact of the tariff imposed on Monday will be on aluminum, used in transport, construction and packaging, with net imports accounting for around 82 percent of US requirements, according to Morgan Stanley.
The US aluminum premium over the global benchmark on the London Metal Exchange has shot up by a quarter since Friday to 35 cents per pound and has surged by 60 percent since Trump was elected.
“Volatility in the aluminum market is expected to remain high after Trump announced tariffs on US imports. We expect the US aluminum industries will struggle to avoid the tariffs in the short term, putting upward pressure on prices,” ANZ Research said.
While Trump did not impose tariffs on copper, he did threaten duties last week without giving further details.
