European Aluminium Premium Hits Four-Month High as China Presses Anglo-Teck on Copper

Aluminium premiums in Europe jumped to their highest level in almost four months, with two industry sources attributing the move to concerns that a potential cut in US tariffs on Canadian metal could leave the continent short of supply. The front-month COMEX European duty-paid aluminium premium rose to $574 a metric ton on Thursday, up 10% from the previous day and the highest since June 8, according to LSEG data. The premium sits on top of benchmark London Metal Exchange aluminium prices for physical metal. The European premium has been climbing on reports that President Trump's 50% tariff on aluminium imports could be halved to 25% for material from Canada.

The regional split is stark. While European supply stays tight, the COMEX Japan aluminium premium, a reference price for Asia, has fallen 35% since the end of July and this week hit $226 a ton, its lowest since mid-March. Consultancy CRU said Asian premiums are retreating as inventories build and underlying demand remains weak, adding that new capacity in 2027 would reach Asia first and could apply further pressure. Three-month aluminium on the LME fell for a fifth straight session on Friday, touching $3,105 a ton, its weakest since July 7, so the premium strength is about regional availability rather than a rally in the underlying contract.

Copper's squeeze is structural rather than tariff-driven. China's State Administration for Market Regulation has asked Anglo American to commit to supplying the country with a steady flow of copper concentrate as a condition for approving its proposed $54 billion merger with Canada's Teck Resources, according to three people familiar with the process. The demand reflects China's struggle to feed a smelting industry that refines up to 60% of the world's copper cathodes but faces its worst feedstock shortage in decades. Chinese refined copper output is expected to grow at its slowest pace since at least 2000 this year as smelters compete for raw material, while falling byproduct sulphuric acid prices squeeze profitability.

As a major consumer of both companies' copper, China has effective veto power over the merger and has historically used antitrust reviews to extract behavioural remedies protecting domestic industrial supply. The combined group would control around 5% of global copper supply, below the 10% to 15% thresholds that usually trigger competition concerns, and both companies still expect the deal to close by March 2027. Analysts warned that routing Anglo Teck's unrefined volumes away from the open market could hasten closures at Western processing facilities and accelerate a shift away from annual benchmark pricing toward index-linked spot terms.