After US tariffs: Danger of scrap leakage

Speira recycles around 650,000 tonnes of aluminium every year at its eleven sites in Germany and Norway. Recycling one tonne of aluminium causes up to 95 percent less CO2 than primary production. The US import tariffs on our light metal and its derivatives that recently came into effect pose a considerable threat to the supply of raw materials for the German aluminium industry. This is because scrap is explicitly not covered by the tariffs. As a consequence, this will lead to a massive outflow of aluminium scrap in Europe - to the disadvantage of the circular economic models that have been built up over the years.

Aluminium scrap is linked to the price of primary aluminium. Shortly after the announcement and entry into force, it is already clear that the tariffs will significantly increase the price of Midwestern Premium, i.e. the regional price for primary aluminium in the USA. As a result, scrap prices will also increase accordingly, making it much more attractive to offer the material on the American market. At the same time, recyclers in the United States have invested massively in their infrastructure in recent years and have the capacity to process this scrap. This means that we are already seeing a massive outflow of scrap from the EU. At the same time, arbitrage by cost in the USA has risen by USD 300-400 compared to the level in Europe within a very short space of time.

Such a development has a massive impact on the supply of aluminium recyclers and jeopardises key political goals, including decarbonisation and the expansion of the circular economy, and also leads to greater dependence on critical and strategic raw materials.

In view of these developments, we believe there is an urgent need for action. We do not have time to observe developments on this issue. Through our association Aluminium Deutschland, we have therefore urged the German government to advocate measures in Brussels to secure the European scrap supply - in particular the prompt introduction of export duties on aluminium scrap to all third countries. It is to be expected that the quantities will otherwise be diverted to the USA via third countries, with all the consequences described above.

Rob van Gils, President of Aluminium Deutschland:

• ‘The German government must advocate export duties on aluminium scrap in Brussels in order to stop the uncontrolled outflow and ensure fair competitive conditions for German recycling companies. Without swift and decisive action from the EU, the structures of the circular economy that have been created over the years will be destroyed and companies will be forced out of the market.’
• ‘Companies are already feeling the pinch. If we don't act immediately, the scrap shortage will worsen dramatically. This not only jeopardises the expansion of the circular economy, but also undermines Europe's decarbonisation goals and raw material security.’