Published by Global Banking & Finance Review®
Posted on November 12, 2025
3 min readLast updated: January 21, 2026
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EU aluminium buyers scramble for supplies as Iceland's smelter outage hits and a carbon tax looms, raising premiums to a nine-month high.
By Tom Daly
(Reuters) -European aluminium importers are racing to secure supplies of the metal following an outage at a key smelter in Iceland and before a new carbon tax comes into force, pushing premiums to a nine-month high.
The European aluminium duty-paid premium, which buyers on the physical market pay over the London Metal Exchange price to cover taxes, freight and handling costs, is currently at $324 a ton. It hit $330 on November 3, the highest since late January.
The 320,000-ton-per-year Grundartangi smelter in Iceland, owned by Century Aluminum, cut production by two-thirds in late October due to electrical equipment failure.
It will take an estimated 11-12 months for replacement transformers to be manufactured, shipped and installed, Century CEO Jesse Gary said on an earnings call last week, adding that the potline could be restarted sooner if the failed transformers can be repaired.
Iceland was the EU's second-biggest supplier of aluminium in the first eight months of this year, sending 241,412 tons. Top supplier Mozambique shipped 337,670 tons to the bloc.
After a two-year transition period, importers of aluminium into the European Economic Area (EEA) will be charged a carbon price under the EU's Carbon Border Adjustment Mechanism (CBAM) from January 1, 2026, although they will not have to make payment until 2027.
IMPORTERS FRONT-LOADING ALUMINIUM AHEAD OF CBAM
Importers have been front-loading aluminium ahead of CBAM, said Wood Mackenzie aluminium research director Edgardo Gelsomino, citing conversations with traders.
"In addition to avoiding carbon costs, they're also aiming to reduce the administrative burden associated with the new regulation," he added.
The CBAM charge, which will depend on the emissions of the aluminium smelter behind the metal, aims to put a fair price on carbon emitted during production. It will also apply to EU imports of iron and steel, cement, electricity, hydrogen and fertilisers from next year.
Metal made by Norsk Hydro in Norway and smelters in Iceland, as part of the EEA, will not be subject to the charge.
Aluminium produced by many Middle Eastern and Canadian smelters will face a relatively small cost of 10 euros ($11.66) to 50 euros per ton because of their low direct emissions intensity, said Nick Ogilvie, CBAM lead at carbon accounting software provider CarbonChain.
"But there are certainly smelters whose products are unlikely to be coming to the EU anymore because they're using very old technology," Ogilvie added.
($1 = 0.8575 euros)
(Reporting by Tom Daly; editing by Pratima Desai and Ed Osmond)
Aluminium is a lightweight, silvery-white metal used in various applications, including packaging, transportation, and construction due to its durability and resistance to corrosion.
A carbon tax is a financial charge imposed on companies based on the amount of carbon dioxide emissions they produce, aimed at reducing greenhouse gas emissions.
The London Metal Exchange (LME) is a commodities exchange where metals are traded, providing a platform for price discovery and risk management in the metals market.
Import premiums are additional costs that buyers pay over the market price of a commodity to cover expenses such as taxes, freight, and handling.
The Carbon Border Adjustment Mechanism (CBAM) is a regulatory framework that imposes a carbon price on imports to the EU, aiming to level the playing field for domestic producers.
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