"Our contracts provide a key risk management tool for U.S. aluminum consumers and have become a critical piece to mitigate price risk and help protect margins," said Ian Caton, Senior Director of Metals Products at CME Group. 

The conflict in Iran expedited the expansion of an already-growing regional premium, he added. The introduction of Section 232 tariffs in 2018 first kicked off this increase for U.S. consumers, a trend further exaggerated as tariff policies broadened over the past year.

In contrast, European and Japanese markets face considerably smaller regional spreads, as they lack comparable tariff structures, though they have also jumped in the wake of the war.

Europe's premium is now roughly at $612 per tonne while Japan is at $302 per tonne, both up around 70% from their pre-war levels.

Interestingly, however, Europe’s Rotterdam premium surged over 50% in 2025 as a shutdown at Iceland's key supplier, Aluminum Iceland, a carbon tax for non-EU importers and an output slump in Mozambique strangled supply. 

In Japan, opposite forces were at play. The Asian country faced an aluminum oversupply as the automotive industry slashed production and stocks were already abundant. This brought prices lower, hitting a $58 per tonne bottom late last year. Then, as demand began to pick up and the trade blockade started, prices surged to $181 a tonne in February before settling even higher as of late April.

“The impact depends on the region,” Caton noted. “The global price plays a role, but regional considerations have become an increasing proportion of the notional value of the all-in cost of aluminum. The U.S. Midwest premium, for example, now accounts for over 40% of the all-in transaction price for aluminum in the U.S.”

Amid supply headwinds, U.S. buyers are bolstering their recycling capacity to ensure they have sufficient aluminum stocks.

Subodh Das, CEO and founder of industry consultancy Phinix, said the United States has invested $10 billion in the process and has the capacity to increase repurposed output to 4 million tonnes this year, up from 3 million tonnes in 2025.

Beyond ramping up old facilities or installing new ones, there must be a bigger effort to leverage landfilled capacity, according to Das.

"One and a half million tons of scrap are landfilled every year while 1.5 million are exported," he said. "We need to stop landfilling and we need to export less."

The U.S. could also benefit from raising production, Das added, an effort that recently got a boost after Emirates Global Aluminium and Century Aluminum struck a joint venture to make 750,000 tonnes of the metal in Oklahoma, nearly doubling current capacity from a plant it claimed will be the nation's largest.

Despite the war's uncertainty, Das said the U.S. has a 120-million ton aluminum reserve in landfills, largely derived from used beverage cans, that could be put to work if the conflict further impacts global stocks.

Alan Taub, an engineering professor at the University of Michigan's Electric Vehicle Center, agreed more must be done to buoy recycling, especially as automobile prices continue to skyrocket.

"The aluminum price impact is the most concerning coming from the war," he said. "We are having an automotive affordability problem with average sales prices north of $50,000. While the industry tends to know how to cope by adding extra capacity, or using materials in different ways, after adding value [like turning the metal into an automotive casting], component prices have risen dramatically."

By adding secondary or 'scrap' aluminum into the manufacturing mix, industries can reap huge cost savings from lower energy usage while cutting emissions, said Taub.

But this isn't always easy.

"One of the challenges in shredding [a car dismantling process] is that you get secondary aluminum that can be contaminated with iron (from steel bolts or brackets)," which can undermine the structural integrity of the resulting material, Taub said. Consequently, the industry is developing more iron-tolerant variants such as aluminum alloys blended with manganese and/or magnesium.