Downstream Aluminum: 2Q Preview: Downstream Durability

Research evidence excerpt

Downstream Aluminum: 2Q Preview: Downstream Durability

Global Research

7 July 2026ab

Downstream Aluminum Equities

Global2Q Preview: Downstream Durability

Aluminum

Alex Stansbury, CFA

Investors underestimate the durability of policy-driven downstream earnings Analyst

The end of ME conflict has contributed to >15% correction in LME aluminium price alex.stansbury@ubs.com

& delivery of inventory trapped in ME (UBSE 300-500kt) is likely to alleviate tightness in +1-212-882 0097

US/EU markets is the coming months; as a result US & EU premiums have eased from Daniel Major

record levels & may decline further. Whilst further moderation in spot premiums may Analyst

impact sentiment, in our view the market is underestimating the durability of daniel.major@ubs.com

downstream aluminum earnings. We continue to prefer CSTM (Buy) over KALU +44-20-7568 3472

(Neutral) on valuation, exposure to UBC spreads & financial leverage, though we expect George Eadie

both to benefit from recycling spreads that remain structurally above historical levels due Analyst

to policy support rather than purely cyclical factors. george.eadie@ubs.com

+1-646-996 4596

Whilst USMCA, Section 232 (S232) & Oswego remain key debates, we continue to see a Ethan Hong

structurally higher Midwest Premium (MWP), wider recycling spreads & a slower-than- Associate Analyst

ethan.hong@ubs.com

expected normalization of US Used Beverage Can (UBC) supply-demand dynamics. In

+1-212-649 8258

this note, we address key debates across the US downstream aluminum sector, arguing

that: (1) a Canadian USMCA carve-out may pressure the MWP, but does not eliminate

the structural US aluminum deficit, with tariffed imports continuing to anchor domestic

pricing; (2) While S232 rates, exemptions & quotas may evolve, history suggests