Steel and Aluminum Tariffs: Answers to Your FAQ’s and Strategies to Employ During this Turbulent Time

Basic Metals President Andy Fogel delves into the impact of recent tariffs on aluminum prices, and strategies manufacturers can employ to counteract the rising cost of steel and aluminum.

There are a lot of questions surrounding the tariffs recently imposed on steel and aluminum. In this blog, Basic Metals President Andy Fogel answers some of the most common questions he has received from manufacturers, and explores the strategies manufacturers can use as they navigate through this turbulent metals market.

Have you navigated through volatile pricing in the metals market before?

“In 2018, we saw similar uncertainty in material costs when the Section 232 tariffs were applied to aluminum, along with anti-dumping and countervailing duties on aluminum products from certain countries. Manufacturers had to deal with price fluctuations and challenges in securing stable pricing, much like what we're seeing now with current tariff and supply chain issues.”

How have tariffs affected aluminum prices?

“We have already seen a substantial rise in aluminum ingot. The Midwest premium has risen significantly since tariffs were announced. Many intelligence sources are stating that the premium will continue to rise over the upcoming weeks. With foreign imports becoming more limited, the domestic rolling mills have increased their conversion pricing by $.15-.20/lb. Less foreign supply into the United States could potentially lead to allocation at the domestic mills and creates the potential for further conversion increases.”

What strategies can manufacturers employee to keep their material costs low?

“During times like this, it can be incredibly helpful for manufacturers to turn to and lean on experts with extensive knowledge of the metals market and multiple supply chain options. At Basic Metals, we have a large network of both foreign and domestic supply chain options that allow us to source the best materials for our clients. By working closely with our customers, we evaluate key factors such as price, quality, delivery performance, and other variables to determine the most suitable supplier for each situation. This flexibility enables us to adapt to changing market conditions and meet our clients’ specific needs, whether they require competitive pricing, high-quality materials, or timely deliveries.

While we cannot directly control the price of traded metals, we offer our clients the ability to maintain cost certainty by providing the option to hedge metal for a specified period. This strategy allows our customers to lock in prices and avoid the risks of market fluctuations, particularly in volatile times driven by tariffs or other market factors. By offering this option, we help ensure that our clients can better manage their budgets and reduce the impact of price volatility on their operations.

Additionally, we can also help our customers better manage their cash flow by offering Just-In-Time (JIT) hold and release inventory programs. These programs allow manufacturers to hold inventory with us and release it as needed, reducing the burden of carrying excess stock and providing greater flexibility in managing working capital.”

What are you and your team’s predictions for metal costs over the next year?

“Looking ahead, we believe there’s still potential for Midwest aluminum ingot prices to keep rising over the next year. If domestic mills hit capacity constraints, it’s likely that conversion pricing will also go up as they adjust to higher raw material costs and strong demand for aluminum products. However, with the development of a new greenfield mill (Aluminum Dynamics) and capacity expansions at existing domestic mills, more domestic supply should start coming into the market.

As tariff dynamics shift, the administration has hinted at exclusions for specific countries, which could ease some of the price pressure. If the U.S. grants tariff exemptions to certain regions, it could open more sourcing options and help reduce some of the upward pricing trends.”

Have any other questions about steel and aluminum tariffs?

Manufacturers can send questions to the Basic Metals Team. With more than 40 years in the industry, the Basic Metals Team is equipped and committed to help manufacturers source metals that fit their project needs and their budget.