European Aluminium Scrap Exports Surge 273% as US Tariffs Create Supply Crisis

European aluminium scrap exports to the United States have surged 273% in the first quarter of 2025 compared to the same period last year, threatening to create critical shortages for European recyclers as US tariffs drive unprecedented demand for scrap metal. The crisis stems from the US doubling Section 232 tariffs on aluminium imports from 25% to 50% while leaving scrap metal exempt, creating a massive price differential that is draining Europe of essential recycling feedstock.

European Aluminium, the trade association representing the continent’s entire aluminium value chain, warns that two-thirds of the total scrap volume exported in all of 2024 was shipped in just the first three months of 2025. This alarming trend threatens to undermine Europe’s circular economy objectives and jeopardize the viability of the region’s aluminium recycling and semi-fabrication industries, which depend on steady scrap supplies to produce low-carbon secondary aluminium.

Tariff Structure Creates Market Distortion

The fundamental problem lies in the asymmetric nature of US trade policy, where primary aluminium and value-added products face steep 50% tariffs while aluminium scrap remains tariff-free. This structure has made European scrap highly attractive to US buyers, who can now offer record prices and draw material away from the European market. German industry association Aluminium Deutschland warns that this dynamic could result in scrap shortages or complete sell-outs of available material across Germany and Europe.

Thu Lan Nguyen, head of foreign exchange and commodity research at Commerzbank, noted that the trend is likely to intensify due to the recent tariff increase. The German bank has observed that US companies are buying scrap at premium prices, making it increasingly scarce for European recyclers who cannot compete with American buyers backed by tariff-protected domestic markets.

The situation represents a classic case of “scrap leakage,” where trade distortions cause critical raw materials to flow away from regions that have invested heavily in recycling infrastructure. European recyclers, who have spent years building circular economy capabilities, now face the prospect of losing their essential feedstock to foreign buyers offering unsustainable prices.

European Commission Considers Export Restrictions

In response to the escalating crisis, the European Commission has launched consultations on potential countermeasures, including export fees or outright restrictions on aluminium scrap exports to the United States. The Commission’s Steel and Metals Action Plan outlines a dual strategy of stimulating domestic demand for recycled metals while exploring export controls to prevent further scrap leakage.

Paul Voss, Director General of European Aluminium, emphasized the urgency of coordinated EU action, stating that the Commission must respond immediately by introducing corresponding duties on scrap exports to the US. The organization advocates for broader export fees applying to all destinations, not just the United States, to stop scrap leakage and secure access to critical secondary raw materials.

The increased likelihood of EU export restrictions is already adding upward pressure to European aluminium premiums, making raw materials more expensive for domestic manufacturers. Industry voices stress that without decisive intervention, years of investment in Europe’s circular economy infrastructure could be undermined, threatening decarbonization targets and resource security.

Broader Market Implications and Copper Spillover

The aluminium tariff crisis is creating ripple effects across other metal markets, particularly copper, where similar dynamics are emerging. Elevated US tariffs on both aluminium and steel are driving increased COMEX inventory growth as traders move large volumes of copper into the United States ahead of anticipated tariffs. This has led to a build-up of inventories and narrowing price premiums between US and international copper markets.

Commerzbank has raised its copper price forecast for the next two quarters to $9,500 ($10,450 USD) per ton, up from previous projections of $9,200-9,400 ($10,120-10,340 USD), citing the impact of tariffs and tight supply conditions. However, analysts expect the surge in US demand to be temporary, with imports likely declining once tariffs are fully implemented or stocks are adequately replenished.

The copper market faces sustained concerns about ore deficits that could constrain global metal output, keeping prices elevated despite expectations of eventual moderation. Mercuria forecasts a copper concentrate deficit of 700,000 metric tons this year and a 300,000-ton deficit for refined metal, potentially pushing prices to record highs.

Industry Response and Long-Term Consequences

US aluminium manufacturers have criticized the steep tariffs, warning they could ultimately reduce domestic demand and harm American producers. The Aluminum Association acknowledges the need for ready and affordable access to metal, noting that current US smelting capacity cannot supply the growing domestic aluminium industry with required input materials.

Charles Johnson, president and CEO of the Aluminum Association, emphasized that while supporting strong trade actions, American aluminium manufacturers need secure access to metal supplies for producing cars, trucks, beverage cans, and defense equipment. The association advocates for continued border actions against unfairly traded aluminium from China while ensuring adequate supply for domestic manufacturers.

The crisis highlights fundamental tensions between trade protection and supply chain efficiency. European recyclers argue that protectionist measures work against the recycling industry, which serves as the backbone of EU circularity goals. EuRIC, representing European recycling companies, warns that closing EU borders for scrap exports will have detrimental consequences for the environment, economy, and competitiveness.

Regional Production Dynamics and Market Outlook

Global aluminium scrap exports have reached record levels, with European exports expected to exceed 1.3 million tonnes in 2024, setting a new high. The Commission attributes this surge to both low domestic demand within Europe and unfair trade practices abroad, where buyers can pay higher prices thanks to subsidies or lower regulatory standards.

The situation is exacerbated by reduced aluminium demand in Europe’s construction and manufacturing sectors, which has decreased scrap generation levels. Simultaneously, the EU’s carbon border adjustment mechanism, entering full implementation in January 2026, is forcing importers to find alternative sources as current suppliers cannot provide required carbon documentation.

Primary aluminium producers have also begun utilizing more scrap in their production processes through improved technology that enables processing of previously unusable low-quality grades. This trend further diminishes scrap availability for secondary producers while increasing overall demand for recycling feedstock.