The Commodity Futures Trading Commission is planning to overhaul aluminum pricing in the US and looking at whether new contracts could boost transparency, its Chairman Michael Selig said on Friday.
Aluminum is vital for the automotive, aerospace, packaging, construction and defense industries – and prices for the metal have a knock-on effect for the wider economy as they can squeeze margins and ultimately drive up inflation.
US consumers typically pay the benchmark aluminum price on the London Metal Exchange plus the Midwest premium – assessed by price reporting agency Platts, part of S&P Global – to cover costs such as freight, insurance and taxes.
The premium hit a record $1.19 per lb or about $2,620 per metric ton at the start of June, more than double a year earlier when President Donald Trump doubled tariffs on US aluminum imports to 50% to encourage investment in local production.
That left US consumers facing an all-in price of more than $6,000 a ton, as LME aluminum hit four-year highs above $3,700 due to shortages created by the war in the Middle East.
“The concern is that American manufacturers … can face prices incorporating costs that don’t actually reflect their supply chains, through a benchmark structure poorly aligned with US physical metals markets,” Selig said.
“I’ve directed my global markets team to examine these pricing mechanisms and develop concrete reform options that protect US markets and American manufacturers,” he added at the annual meeting of the Beer Institute, some of whose members use aluminum to make beverage cans.
“This is one of my top priorities at the Commission … if we’re successful, you will never have to hear the words ‘Midwest premium’ ever again,” he said, drawing applause from the audience in Washington.
S&P did not immediately respond to a request for comment.
Selig said the Commission would also consider whether more US-based aluminum contracts could “improve local price discovery and give commercial end users more effective hedging options.”
“But launching a contract alone is not sufficient — it can only be useful if businesses actually participate. It needs liquidity from producers, consumers, and other market participants,” he said.
(Reporting by Pratima Desai and Tom Daly; editing by Susan Fenton)
