• Investing
  • Stock
  • Economy
  • Editor’s Pick
Portfolio Performance Today
Stock

Aluminum and steel tariffs spark rise in secondary production, price divergence

by June 12, 2025
by June 12, 2025

US tariffs on steel and aluminum were doubled, but the metal markets appear to have quickly absorbed the impact. 

Aluminum prices on the LME have already fully rebounded to approximately $2,440 per ton after a brief dip.

“The market therefore does not currently seem to expect any major impact on the global supply situation for the raw materials affected,” Thu Lan Nguyen, head of FX and commodity research at Commerzbank AG, said in a report. 

However, the consequences are more far-reaching than they appear at first glance. 

Nguyen said:

It can be assumed that the tariffs will have an impact on other segments of the metal market on the one hand and on the foreign trade policies of other nations on the other.

Demand shift

According to experts, tariffs usually lead to a shift in demand to other substitutes. 

An immediate increase in US production capacities for aluminum and steel is improbable, given their typically slow response times. Therefore, this trend is expected to be even more pronounced for these materials, according to Commerzbank. 

The US steel market is, fortunately, not excessively tight.

US steel mills demonstrated strong capacity utilisation last year, operating at 72-78% during the first eight months. This high domestic output largely met consumption needs, evidenced by imports constituting a mere 13% of apparent consumption.

Source: Commerzbank Research

USGS data indicated that US aluminium smelters operated at only 50% capacity utilisation in 2024, suggesting potential for expansion.

Even at full production capacity, only approximately 30% of consumption would be met, Nguyen noted. 

Given that secondary production, specifically the recycling of aluminum scrap, already constitutes approximately 80% of US aluminum output, the aluminum industry is poised to increasingly prioritise this sector, Commerzbank said. 

This focus is expected to further invigorate secondary production.

Secondary aluminium production

The recycling of aluminium scrap in the US is likely to have consequences for secondary production outside the US. 

According to European Aluminium, the recent dramatic acceleration of EU metal scrap exports to the US is undoubtedly linked to aluminium tariffs. 

These tariffs are causing a shift in US demand from primary to secondary aluminium.

Beyond the US, aluminum scrap prices are expected to decline in the medium to long term. 

This is largely due to the increased availability of primary aluminum. 

US companies have ceased importing primary aluminum due to prohibitive tariffs, which could make exporting to the US more appealing, Nguyen added.

Source: Commerzbank Research

Divergence in EU and US prices to continue

“One could argue that demand outside the US will likewise shift from secondary to primary production, meaning that the supply situation would remain more or less unchanged, at least from a global perspective,” Nguyen said. 

Nevertheless, this is probably unsuitable for the EU, given its commitment to boosting its domestic supply of crucial minerals and metals.

EU also aims to increase secondary production for sustainability, as it is less energy and resource-intensive than primary production.

Due to the recent US tariff increase, the introduction of restrictions on scrap metal exports is now highly probable and under consideration in the EU. 

“Restricting these exports would lead to a higher supply of scrap metal on the EU market and put pressure on prices there, which were already expected to come under pressure due to a higher supply of primary aluminium,” Nguyen said. 

The divergence in aluminium prices between the US and Europe is therefore likely to continue.

The post Aluminum and steel tariffs spark rise in secondary production, price divergence appeared first on Invezz

0 comment
0
FacebookTwitterPinterestEmail

previous post
Airbus sees aviation boom ahead, global fleet to near 50K by 2044 with India in lead
next post
Asian markets open: Nikkei, Hang Seng fall on 55% US-China tariff shock; Sensex poised for weak start

Related Posts

Trump gives ’50-50 chance’ for EU trade deal...

July 27, 2025

Japan’s $550B investment could back Taiwan chip plants...

July 27, 2025

Musk hints at budget Model Y, but analysts...

July 27, 2025

From $824 to over $1,300: how soaring rents...

July 27, 2025

Top 3 catalysts for the VOO ETF stock...

July 27, 2025

Top catalysts for the Nikkei 225 Index this...

July 27, 2025

GO Residential REIT drops on debut after oversubscribed...

July 26, 2025

Meta to halt political ads in EU from...

July 26, 2025

Here’s why the Coursera stock price has surged...

July 26, 2025

What is Lip-Bu Tan doing for Intel stock...

July 26, 2025

Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.

By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

Recent Posts

  • Trump gives ’50-50 chance’ for EU trade deal as leaders prepare for Sunday meeting

    July 27, 2025
  • Japan’s $550B investment could back Taiwan chip plants in US, says trade official

    July 27, 2025
  • Musk hints at budget Model Y, but analysts doubt its impact on Tesla’s sales downturn

    July 27, 2025
  • From $824 to over $1,300: how soaring rents are consuming American paychecks

    July 27, 2025
  • Top 3 catalysts for the VOO ETF stock this week

    July 27, 2025
  • Top catalysts for the Nikkei 225 Index this week

    July 27, 2025

Editors’ Picks

  • 1

    Meta executives eligible for 200% salary bonus under new pay structure

    February 21, 2025
  • 2

    Walmart earnings preview: What to expect before Thursday’s opening bell

    February 20, 2025
  • 3

    New FBI leader Kash Patel tapped to run ATF as acting director

    February 23, 2025
  • 4

    Anthropic’s newly released Claude 3.7 Sonnet can ‘think’ as long as the user wants before giving an answer

    February 25, 2025
  • 5

    Nvidia’s investment in SoundHound wasn’t all that significant after all

    March 1, 2025
  • 6

    Cramer reveals a sub-sector of technology that can withstand Trump tariffs

    March 1, 2025
  • 7

    Elon Musk says federal employees must fill out productivity reports or resign

    February 23, 2025

Categories

  • Economy (1,969)
  • Editor's Pick (192)
  • Investing (185)
  • Stock (1,313)
  • About us
  • Contact us
  • Privacy Policy
  • Terms & Conditions

Copyright © 2025 Portfolioperformancetoday.com All Rights Reserved.

Portfolio Performance Today
  • Investing
  • Stock
  • Economy
  • Editor’s Pick
Portfolio Performance Today
  • Investing
  • Stock
  • Economy
  • Editor’s Pick
Copyright © 2025 Portfolioperformancetoday.com All Rights Reserved.

Read alsox

Lloyds share price dips as profits beat...

July 24, 2025

Nvidia’s investment in SoundHound wasn’t all that...

March 1, 2025

Europe markets open: stocks poised higher; central...

May 8, 2025