Beer Institute requests Department of Commerce address anticompetitive activities driving increases in aluminum prices
WASHINGTON, DC — In comments filed with the Department of Commerce regarding the recently implemented tariff on imported aluminum, the Beer Institute requested that the Department work with the Department of Justice and the Federal Trade Commission to address potentially anticompetitive activities in the aluminum market that are driving up aluminum prices.
“Just as the president has said he wants to protect American manufacturers, investigating the possible manipulation of our nation’s aluminum market will guarantee America’s more than 5,000 active breweries have greater predictability when purchasing aluminum to package their beer,” said Jim McGreevy, president and CEO of the Beer Institute. “We hope that the administration will do everything in its power to defend the more than 2.2 million American jobs that depend on our nation’s vibrant beer industry.”
American businesses that use cansheet, including brewers, purchase aluminum by paying a Midwest Transaction Price, which consists of two major components: an underlying base price for the aluminum metal as traded daily on the London Metal Exchange and an additional component known as the Midwest Premium.
Created by metal producers years ago, the Midwest Premium was originally intended to cover the logistical costs of moving metal into North America. Over time, the Midwest Premium has become a device to speculate and artificially inflate the price paid for aluminum at the expense of end-user businesses and consumers.
In fact, the Midwest Premium has soared more than 135% since the beginning of this year. This steep increase occurred even before the aluminum tariffs went into effect on March 23. With a large surplus on aluminum already in the United States as well as in storage facilities around the world, the increase in the Midwest Premium may not reflect actual trades in aluminum or purchases. Unfortunately, no U.S. agency regulates the Midwest Premium pricing system, ultimately disadvantaging end users, including brewers, as well as consumers.
Aluminum is critically important to America’s brewers, which purchased more than 36 billion aluminum cans last year. More than 60 percent of all beer produced and sold in the United States is packaged in aluminum cans and aluminum bottles. Indeed, the aluminum used to make beer is the single largest input cost for American brewers.
“We appreciate the president’s dedication to American businesses. Shining a light on the opaque Midwest Premium will ensure that American brewers will be paying a fair price for aluminum, allowing them to continue to innovate, support jobs and brew America’s most popular alcohol beverage” McGreevy concluded.
In addition to calling for an investigation into the Midwest Premium, the Beer Institute also requested that trade associations be able to participate in the exclusion process on behalf of their members, which will allow the Beer Institute and other trade associations to advocate for the industry, ultimately reducing the bureaucratic burden and costs for American businesses.
To read the full comments, click HERE.
The Beer Institute is a national trade association for the American brewing industry, representing brewers of all sizes, as well as beer importers and industry suppliers. First founded in 1862 as the U.S. Brewers Association, the Beer Institute is committed today to the development of sound public policy and to the values of civic duty and personal responsibility. For additional updates from the Beer Institute, visit our website, follow @BeerInstitute on Twitter, like the Beer Institute on Facebook, and follow the Beer Institute on Instagram.