How aluminum price is calculated: LME, premium and FAB

Nobody publishes the price of an aluminum coil because it changes every day. What can be published, and almost nobody does, is the formula. This is the one Almexa uses and the one every mill in the world uses.

The three components

LME. The London Metal Exchange publishes daily the price of primary aluminum in US dollars per metric ton. It is the global reference: the same number for a mill in Mexico, Germany or China. Look it up at lme.com, Aluminium section.

Regional premium. Having physical metal available in a region costs more than the paper on the exchange: logistics, warehouses, tariffs and local demand. In North America it is called the Midwest premium and it is also public. It moves with tariffs: when the United States raises the tariff on aluminum, the premium rises.

FAB or conversion cost. What the mill charges to melt, cast, roll, anneal, slit and certify. It depends on the product (a painted circle costs more to convert than a mill-finish coil), the alloy, the gauge (thinner means more passes), the width and the volume. FAB is the only thing that changes from one supplier to another; LME and premium are paid by everyone.

An example with round numbers

With an LME of $2,500 per ton, a premium of $400 and a FAB of $900, the price is $3,800 per metric ton. Ten tons: $38,000. The values are illustrative, not an offer; the site's price calculator lets you enter your own.

Why an import price misleads

An FOB price from Asia that looks 25% below the North American mill leaves out:

• Ocean freight and insurance to the port.
• Tariffs: Section 232 in the United States, up to 50% depending on origin; Mexico's 5% to 50% package on non-treaty countries since January 1, 2026.
• Handling, customs broker and inland freight to your plant.
• The financial cost of paying a 30% deposit and waiting two to three months for the material.
• The safety stock you must hold while the ship arrives.

The honest comparison is delivered price at your plant, per metric ton, with a delivery date. Done that way, the gap narrows or disappears, and what is left is time, origin and who answers.

How price is fixed on an order

Industry practice is to fix the LME of an agreed date or average (order date, prior month average) plus the current premium, and the FAB agreed per product. Some recurring-volume customers agree the FAB for a period and let the metal float. Export quotes are in US dollars; that is agreed in writing.

What a buyer should ask for in a quote

1. Breakdown: reference LME, premium, FAB.
2. Metal fixing date.
3. Delivered price or ex-mill price, with freight separate.
4. Delivery date and payment terms.
5. Mill test report and origin documentation included.

With those five points, two quotes compare for real. Without them, one number is compared against another and the one who hid the most wins.