House members seek probe into Midwest premium

Market: Metals
20/08/26

A coalition from the US House of Representatives petitioned the US Commerce Department to investigate the benchmark US Midwest premium (MWP) for primary aluminum, over what they call pricing irregularities in the sales of domestically produced aluminum.

The group of 58 lawmakers sent a letter to Commerce secretary Howard Lutnick on 6 August requesting an investigation into the MWP, which is used in pricing primary aluminum, aluminum scrap and other products,in relation to the sales of domestically produced aluminum at the same levels as imported metal, which carries a 50pc import tariff under Section 232. The representatives noted that S&P Global Platts "is responsible for assessing" the MWP that is most commonly referenced in the industry. Argus also assesses a weekly Midwest premium for primary aluminum.

The group called for Commerce, in consultation with the Commodity Futures Trading Commission (CFTC), to investigate the MWP as part of its national security review of the aluminum industry, including "how the premium is calculated, whether price reporting methodologies are appropriate, and how it affects the use of recycled content".

The letter said that consumers of domestically sourced aluminum ultimately end up paying the 50pc tariff because the MWP incorporates the tariff cost regardless of the material's origin when accounting for the total cost to deliver aluminum into the Midwest. Certain recycled aluminum products and scrap are similarly priced at a discount to the Midwest transaction price — the MWP plus the London Metal Exchange aluminum price — which the letter said has adversely affected US manufacturers, including the beverage industry, which uses more than 70pc recycled content in its aluminum cans.

The Aluminum Association said in a statement that the MWP is "one data point" used to negotiate the price of aluminum and that the association has "no role in developing, publishing or using the MWP or any other industry pricing mechanism."

"Regional transaction premiums are common in the aluminum industry around the world. Similar mechanisms are used to price other metals like lithium, cobalt, nickel and copper," Aluminum Association president Charles Johnson said.

Argus' Midwest premium has risen nearly 104pc from 55¢/lb to $1.12/lb ince 4 June 2025, when the White House raised the tariff on imported aluminum to 50pc. The duty had initially been increased to 25pc from 10pc in March 2025.

The higher tariff has had an outsized impact on domestic aluminum prices because of limited domestic primary aluminum smelting capacity as well as a historic reliance on Canadian aluminum, which had been exempted from tariffs since June 2019. The issue was compounded by global supply shortages and shipment disruptions because of the war between the US and Iran.

US aluminum producer Magnitude 7 Metals recently announced plans to restart its idled Missouri smelter, citing US import tariffs as a driving factor behind the company's decision. Century Aluminum also attributed its ability to restart idled capacity at its Mt Holly, South Carolina, smelter to the 50pc tariff on imported aluminum.

The House members' petition is not the first attempt by lawmakers to scrutinize the aluminum pricing mechanism.

Former US representative Ken Buck, a Republican from Colorado, introduced the Aluminum Pricing Examination (APEX) Act in 2018, which sought to give the CFTC "exclusive jurisdiction" over setting "reference prices for aluminum premiums", after US brewers requested congressional intervention when the MWP climbed following the introduction of 10pc import tariffs on aluminum in US president Donald Trump's first term.

Buck's legislation never made it out of a subcommittee, but other iterations of the APEX Act were introduced in 2021 and 2023 by Wisconsin senator Tammy Baldwin with slight adjustments — mainly giving CFTC only oversight authority into the MWP, rather the ability to set the price. Still, those bills also did not gain traction and died in the Senate Committee on Agriculture, Nutrition and Forestry.

By Jenna Baer

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