What impact do Canadian aluminium exports have on global supply chains and prices in 2025?
Executive summary
Canada exported about US$12.4 billion of aluminum in 2024, with roughly US$11.2 billion destined for the United States, making Canada the dominant U.S. supplier and a meaningful player in global flows [1] [2]. In 2025 those flows were disrupted by U.S. tariffs and shifting demand: analysts reported a 22% fall in unwrought aluminum deliveries to the U.S. in Jan–Aug 2025 and a redirection of Quebec production to Europe, a move that tightened U.S. supplies and lifted regional premiums [3] [4].
1. Canada’s export footprint: concentrated, large and strategically timed
Canada supplies a very large share of U.S. imports — about 70–85% in different datasets — and in value terms exported roughly US$12–13 billion of aluminum in 2024, most of it from Quebec and overwhelmingly to the United States [2] [1] [5]. That concentration makes Canadian shipments a short-run shock absorber for North American industry and a lever for U.S.-market price dynamics when flows change [5] [3].
2. Tariffs as the immediate disruptor: diversion to Europe and price ripples
The U.S. tariff actions in 2025 prompted Canadian smelters to redirect large volumes to Europe — Quebec’s share to the U.S. fell from about 95% to 78% between Q1 and Q2, while Europe’s share rose sharply — creating new cross-Atlantic trade lanes and a temporary glut in some European hubs [4] [6]. That diversion reduced U.S. physical availability, contributing to surging U.S. Midwest premiums and forcing delivery re-routes that lifted domestic U.S. prices [7] [3].
3. Quantified supply shifts and short-term market effects
Trade-data providers recorded a 22% year-on-year fall in Canada’s unwrought aluminum deliveries to the U.S. for Jan–Aug 2025 (a drop of about 410,600 tonnes to 1.4 million tonnes), while U.S. premiums and Midwest spreads spiked, reflecting inventory drawdowns and higher landed costs [3] [7]. These moves, reinforced by tariff-driven frictions, materially tightened U.S. downstream margins for can-makers, automakers and other intensive users [7] [8].
4. Global context: from surplus talk to structural tightness that magnifies Canada’s role
Industry reporting for 2025 shifted from decades of surplus toward a supply-constrained outlook driven by capacity caps in China, sanctions on Russian metals and constrained scrap supply; that broader backdrop made Canadian primary shipments more consequential to global balances and prices [9] [10] [11]. Analysts projected deficits in 2025 (estimates ranged in hundreds of thousands of tonnes), so interruptions in a large exporter like Canada have outsized price effects [12] [13].
5. Two competing narratives about permanence versus transience
Some sources frame the Canada-to-Europe diversion as a temporary, tariff-driven arbitrage that will reverse if U.S. premiums rise enough or tariffs change; others warn logistical and contractual shifts (new shipping patterns, renegotiated supply contracts) could lock in altered flows and leave U.S. manufacturers paying higher premiums for longer [4] [6] [14]. S&P and market analysts flagged both possibilities: short-term reshuffling versus a potential paradigm shift in trade routes [4] [15].
6. Downstream and policy implications: winners, losers and leverage
U.S. domestic producers see higher prices that may revive local capacity plans, while Canadian producers gain bargaining power to seek higher premiums or alternate buyers in Europe — but that comes with exposure to European energy prices, logistic costs and longer lead times [16] [4]. Canadian provinces such as Quebec face concentrated employment and political risk if U.S. demand structurally weakens, prompting government and industry to pursue diversification and low-carbon aluminum plans [5] [17].
7. Limits of available reporting and open questions
Available sources document value and tonnage shifts, tariff impacts and premium spikes, but do not provide a consensus projection for how long re-routed Canadian flows will persist or the exact net effect on global LME prices beyond mid‑2025 [4] [3] [9]. Also not found in current reporting: full, audited company-by-company shipment rerouting figures for all of 2025 and precise pass-through rates from Midwest premiums to finished-goods prices across industries.
8. Bottom line — leverage in a tight market
In a year when analysts increasingly see supply-side constraints, Canada’s large, concentrated exports act as a pressure point: disruptions or redirections materially tighten U.S. physical markets, lift regional premiums and reverberate into global price benchmarks. Whether those effects prove temporary or structural depends on policy (tariffs), contract renegotiation, and how quickly new capacity or recycled supply scales — all trends tracked closely in the reporting cited above [3] [13] [11].