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A regulatory gap in the Biden administration’s aluminum tariff policy has unleashed a global scramble for aluminium scrap, transforming a niche commodity into a flashpoint of international trade friction. While tariffs on finished and semi-finished aluminum now stand at 50%, scrap imports remain untouched—prompting a surge in U.S. demand and triggering economic countermeasures from Europe and Asia.
U.S. imports of aluminum scrap spiked to over 80,000 metric tons in March, the highest in two years, driven by buyers taking advantage of the tariff exemption. The carveout was designed to support domestic mid-stream processors, but the unintended effect has been a dislocation in global supply chains.
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Europe Scrambles to Curb Scrap Leakage
Across the Atlantic, the European Aluminium association is sounding the alarm over what it calls a “full-blown scrap crisis.” Exports to the U.S. surged in Q1 2025, as American buyers offered premiums beyond what European recyclers and manufacturers could match.
“The economics are broken,” said Paul Voss, Director General of the association. “Critical raw material is bleeding out of Europe.”
The European Commission, citing its Circular Economy Action Plan, is now weighing retaliatory duties to restrict the outflow of aluminum scrap. A final decision is expected by Q3, but political pressure is mounting for earlier intervention.
U.S. Premiums Surge as Supply Tightens
The Midwest aluminum premium—a key benchmark tracked by the London Metal Exchange—has reached a record $1,325 per metric ton. That’s well above the global spot price of roughly $2,430. Analysts attribute the premium spike to structural changes: scrap substitution, tariff arbitrage, and limited inflows of ingot from traditional suppliers.
The result is a two-speed market: scrap-rich U.S. processors enjoy a margin advantage, while manufacturers and consumers face rising input costs.
A Harbor Aluminum report previously showed that processors typically pass along tariff costs, even when sourcing domestically. That practice is now entrenched, further widening margins for mid-stream firms.
China Faces Tightening Feedstock Access
China, the world’s top aluminum scrap importer, is feeling the squeeze. With annual intake averaging 1.8 million tons, Beijing had eased import standards to promote green manufacturing. But now, with the U.S. absorbing larger volumes and the EU contemplating restrictions, Chinese buyers face limited access and inflated prices.
“The market is bifurcating,” said a Hong Kong metals trader. “What used to be regional arbitrage is now a global realignment.”
Structural Shift, Not Just a Trade Spat
This is more than a protectionist episode. The aluminum tariff policy—by exempting scrap—has reordered global trade patterns. Markets have responded swiftly. So have policymakers.
If Europe introduces duties, and China escalates sourcing efforts, the global aluminium scrap market could fracture into closed loops. The U.S. may benefit in the short term, but retaliation and volatility loom.
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