North America Metals & Mining: Sunday Morning Metals: Upcoming Prints & 2Q Takeaways; AA Mgmt Meetings

Research evidence excerpt

North America Metals & Mining: Sunday Morning Metals: Upcoming Prints & 2Q Takeaways; AA Mgmt Meetings

reiterated focus back to de-leveraging, with near-term cash generation put

toward debt paydown and further support from asset monetization, Ma’aden shares and

AliGroup deal lock box structure (implied ~$700M on spot).

Sector Highlights

Trump Administration establishes framework for aluminum onshoring tariff incentive

program, according to The White House on July 20 (link). The proclamation modifies the

existing Section 232 aluminum tariff regime by directing DoC to implement an onshoring plan

framework that offers preferential treatment for companies investing in new US primary

aluminum (smelting) capacity, with construction committed to start by January 20, 2029. If the

DOC approves a given plan, the company could annually import primary aluminum volumes

tied to the project’s reasonably anticipated annual output at half the otherwise-applicable Section

232 duty rate (25% vs. 50%). Our thoughts: Potential imports from implied capacity restarts

and new projects are not enough to close the supply deficit (~3.8Mt), suggesting the marginal

import would still face the 50% Section 232 rate (supportive for MWP). We also don’t sense this

changes the rationale for a restart of curtailed capacity at Alcoa’s Warrick smelter.

USTR signals interim USMCA trade deals by year-end, according to Platts on July 22.

Ambassador Greer hopes to reach interim arrangements with Canada and Mexico by year-end

and reiterated a tariff-heavy stance, including 50% tariffs on steel/aluminum and more recent

50% tariffs on certain Canadian imports. Our thoughts: We continue to view S232 steel tariffs

as durable and feel that any potential carve out would likely still entail a TRQ guardrail with a