Nonferrous markets challenged recyclers in 2025

“It was a very tough, challenging year,” a trader based in the South says when asked to sum up 2025. “But if you could manage it well, it was a good year; but it was wild,” he says, given the differences in consumption and the tariffs introduced by the Trump administration.

The increase in the Section 232 tariff on aluminum imports into the U.S. from 25 percent to 50 percent and the widespread elimination of product and country-based exclusions earlier this year, in particular, have had widespread effects on the U.S. scrap market.

“Section 232 increases have driven the Midwest premium [MWP] to historical levels, which has in turn made the U.S. the premier destination for scrap units,” an executive with a scrap processing company based in the Midwest says. “This influx of material (primarily from Mexico) has changed the supply/demand balance on most items, resulting in sizeable widening in scrap spreads—further exacerbating the spread widening that already naturally occurs as MWP increases.”

Additionally, multiple fires at Novelis’ Oswego, New York, aluminum plant have affected the aluminum industry and processors of recovered aluminum. The Oswego facility produces more than a billion pounds of aluminum sheet annually, serving the automotive, beverage can and building and construction markets.

“The overall decrease in North American hot mill capacity forced a reduction and shift in domestic ingot casting,” the executive says of the Novelis fires. “Many annual scrap supply contracts were nullified via force majeure, and the supply disruptions in automotive body sheet have impacted OEM [original equipment manufacturer] build rates, reducing overall demand not only for wrought alloys but also secondary ingot.”

“The aluminum market is in a really strange place right now,” the trader based in the South says, adding that demand in 2026 is uncertain with contracts resetting. “I think that because of all this uncertainty, and because of all the manufactured volatility with tariffs and all the changes that are on some level artificial, people don’t want to commit too far in the future because it could go the other way.”

The trader says the Oswego fires all but wiped out fourth-quarter domestic recycled aluminum consumption. “There’s clearly enough metal out there, and the problem is consumption, not supply.”

On the red metals side, he says all the cathode entering the country earlier this year in anticipation of a Section 232 tariff on copper imports, which the administration levied starting in August (and did not end up including cathode), killed copper demand for a time. 

The trader in the South says having a well-diversified consumer base has been important to maintaining material flow, particularly for companies that are managing large volumes of recycled metal.  

The export picture is mixed as of December, with demand for secondary aluminum grades such as taint, tabor, tense and zorba going coming from India and Southeast Asia, the executive based in the Midwest says. The same cannot be said for mill-grade scrap. “With the elevated premium, there is no market for mill grades to be exported, and that should be the case for the foreseeable future.

“Asia is also active in buying red metals,” he says, though customers want to avoid arrivals during the Lunar New Year celebrations in February.   

The executive adds that global trade remains “unsettled” with ongoing tariff and policy shifts, saying this creates uncertainty for shippers. “Ocean freight markets are highly volatile: U.S. import demand has softened, global container growth has slowed and carriers continue to report congestion, equipment shortages and schedule variability that drive additional costs. On Trans-Pacific lanes, rates have fallen sharply, while backhaul demand—particularly for exempt commodities such as scrap and recyclables—remains weak. European routes are under the greatest strain, with widespread congestion and equipment imbalances across major gateways, compounding operational challenges.”

Scrap generation is subdued, he says. “Lower ferrous prices have negatively impacted peddler flows, while elevated interest rates, inflationary pressures on consumers and uncertainty regarding economic/tariff horizons have manufacturers operating in a much more conservative mode, which has decreased activity and scrap production.”

Regarding the year ahead, the trader based in the South says, “I think the very early part is going to be catch-up time for the mills,” adding that he hopes stability will take root at the end of the first quarter.

When it comes to transporting material, the executive in the Midwest says, “Across North America, operating costs remain significantly above spot truckload pricing, accelerating closures among brokers and asset-based carriers. Domestic demand is tracking near 2015–2016 levels, while capacity remains oversupplied. Unless imports rebound or demand surges, we expect continued capacity attrition through 2026, driving freight rates higher—conservatively +3–5 percent, with some projections reaching 10 percent by year-end.”

He says driver availability also is being pressured by changes to nondomiciled commercial driver’s license rules and stricter enforcement of English-language requirements, noting that this affects some regions disproportionately.

“Seasonal weather and holiday peaks are adding typical short-term capacity constraints.”