- Industry News
- 11.18.2019
As early as President’s Day, we saw aluminum demand coming from all sectors of the market.
The talk of tariffs sure spurred the furious buy up of aluminum and shortly after, the tariffs were implemented.
Prior to the tariffs, the increased demand had already created a bottleneck. Capacity and aluminum stranding being the main issue…..
There are a handful of fully operational aluminum smelters in the U.S., not nearly enough to support the additional demand that will be placed on them especially now that the second largest aluminum supplier in the world, Rusal, has been sanctioned. This will and has forced continued sourcing of aluminum from tariffed sources; essentially raising the cost per pound by 10%
But that is not the only increase we are battling. All domestic manufacturers pay a Midwest Premium on aluminum. The MWPremium encompasses the cost to get the aluminum from port, to the manufacturer/smelter in the middle of the country, where it’s made into a usable good. Since the tariff talks started and the electronic logging of freight driver’s hours took effect, we have seen the premium go from $0.10lb to $0.17lb and as of today, pushing $0.21lb.
Capacity issues, pricey aluminum, expensive freight, lack of freight drivers….you can see where this is heading…….
These market conditions are the reason partnerships with our valued customers have always meant so much to us. We have always valued our loyal customers who through good times and tough times, worked with us and recognized that Paige is dedicated to agriculture and that’s what sets us apart. The pre-planning, overhead, and man hours it takes to offer the service that agriculture requires isn’t for many. We recognize the demands put on our customers and will always strive to do ‘whatever it takes’ to make sure we get you taken care of. We are in a tough industry, selling a commodity to a commodity driven market is a tough feat.
We have a few of these cycles under our belt now and feel we are in a strong position to navigate through them. Paige and our awesome distributors have stepped up and extended our aluminum purchases, we have made investments that will provide additional capacity, and we have worked a lot of hours prepping….and although it won’t be easy, I know that it’s our partnerships with our customers that will get us through.
