Canadian aluminium exports to Europe rose sharply in 2018 and are expected to increase further this year if the Section 232 tariff imposed by the US is not lifted.
The administration of President Donald Trump implemented the Section 232 tariff in March last year, levying a 10pc duty on aluminium and 25pc on steel imports in the US.
As a result of the import duty, Canada has been diverting primary aluminium P1020 shipments to Europe, where Canadian exports have duty free status.
Consequently, Canadian aluminium exports to Europe rose by more than 11-fold to 15,927t in 2018, up from 1,362t in 2017, trade data show. Canada's aluminium deliveries to the EU last year accounted for 4.5pc of the region's total 2018 imports of 353,279t.
The surge in Canadian imports in Europe last year was also partly driven by buyers sourcing alternative supply owing to US sanctions on Russian producer Rusal, which were lifted at the end of January.
Canada was given a grace period to negotiate an exemption from the Section 232 tariff last year but was not successful. The country is in talks with the US government to end the tariff, but it is unclear if any progress has been made.
The Canadian ambassador to the US said in February that the aluminium tariff could end in weeks, but there has been no update since.
"Canada wants an unlimited quota for US exports — that is slowing things down," a trader active in the US aluminium market said.
Because of the close proximity of the two countries, the US is a preferred export market for Canadian-origin aluminium. But until the import duty is lifted, Canada-based aluminium producers will continue to sell metals to Europe on the spot market.
"Lots of Canadians hope that maybe the [tariff] situation could change, so they can ship metal to the US. [But for now] they continue to sell spot to Europe," a second trader said.
Canada produces 3.2mn t/yr of primary aluminium. Producers Alcoa, Aluminerie Alouette and Rio Tinto operate a total of 10 plants in Canada, with nine in Quebec and one in British Columbia.