President Trump’s policies
Previously, we noted how higher Chinese aluminum exports are a risk for aluminum prices. In this part, we’ll look at different domestic factors that could impact US-based aluminum producers in the coming months.
Protecting US manufacturing from the onslaught of imports was among the key topics in President Trump’s election campaign. Trillion-dollar investment plans were also part of the campaign. If implemented, President Trump’s policies could help US-based aluminum producers like Alcoa (AA) and Century Aluminum (CENX).
While higher infrastructure investment would boost demand for commodities including steel and aluminum, tough trade laws would help US producers protect their turf from imports. In the coming months, markets would watch how President Trump plans to fund his infrastructure investments.
Notably, US aluminum production has been falling for the last several years. Domestic companies had to close plants in response to lower aluminum prices (RIO) (NHYDY). The higher cost of production in the US meant that it isn’t viable to produce aluminum in the country.
We should remember that the Trump Administration initiated a Section 232 probe into aluminum imports to determine whether aluminum imports threaten US national security. It will be crucial for investors to follow the findings. The outcome could impact the US aluminum industry (XME). Read Could an Import Tax Do the Trick for US Aluminum Producers? to find out how the imports investigation could impact aluminum prices.
In the next part, we’ll discuss why falling alumina prices could be a challenge for Alcoa.