Nonferrous markets start 2026 in dramatic fashion

Nonferrous markets have had a volatile start in 2026, with copper nearing record highs the week of Jan. 12 before declining somewhat, while aluminum, zinc and nickel also made gains in value that they gave back as the week progressed. That volatility likely will continue if 2025 is any guide.

Looking back at the last year, an executive for a scrap processing company with multiple locations largely in the Midwest notes the dramatic swings in copper’s value on the Comex and the arbitrage that existed relative to its value on the London Metal Exchange (LME). He attributes the “seismic moves” in the metal’s value last year to the Section 232 tariffs the Trump administration first mentioned in February and enacted in August. When the tariffs were limited to copper products and did not include copper cathode, the metal’s value on the U.S.-based Comex quickly decreased, narrowing the arbitrage with the metal’s value on the LME, which reached as much as $1 per pound in July compared with the typical 7 cents or so.

When it comes to recycled copper, the executive says prices are up, so the flow of material into his company's yards is decent. Winter weather could affect that as even high prices are not enough to bring material in with heavy snow and cold temperatures. Despite that, he adds that his company is planning for slightly higher flows of the red metal into its yards this year than in 2025.

“Demand worldwide is fine” for copper scrap, the executive says, though U.S. demand is softer. “If you ask me what the spread on No. 1 copper is today to a domestic consumer, I would tell you a price that is 15-20 cents wider than what we could sell for to other countries, depending on the country.”

Given that scenario, his company is exporting more of its high-grade copper scrap, such as bare bright No. 1, to consumers in India, Japan and South Korea, than it ever has.

“In my opinion, the domestic consumers are going to realize, probably in the next 30 days, that their belief that there’s just this glut of copper that they can buy whenever they decide they want to buy it, and they can buy it wide, is going to finally end,” the executive says in mid-January. “They’ve been right about that for many months, but I think they’re going to realize when they try to buy for February that people didn’t wait for them necessarily, as much as we might have wanted to. … We can’t sell it for 20 cents less just to keep it here.”

He adds that his company was less interested in establishing long-term supply contracts for recycled aluminum this year given the escalation in the Midwest premium. “I think the demand, for the most part, was there as usual. It was just our risk appetite on what we did with some people as opposed to others [that was different].”

Bruce Shapiro, CEO of St. Louis-based Shapiro Metals, in his January “Market Insights” newsletter, writes that the 50 percent Section 232 tariffs on aluminum imports that the Trump administration introduced in June of lats year have resulted in a sustained increase in the Midwest premium from the 40-cent range in June to nearly $1 as of January of this year. “The premium has increased to offset tariffs and attract prime aluminum into the United States. It has also been pushed higher by a $450 per metric ton increase in LME prices,” he writes.

“Prime aluminum has now gone up every month since May, mainly because of the tariffs and the Midwest premium,” Shapiro continues.

The situation is different for scrap, however. “The primary aluminum scrap has not done well due to oversupply,” he says. “Secondary aluminum has been flat all year.”

In the primary sector, the fires at Novelis’ Oswego, New York, site and production issues at other sites severely affected the inflow of recycled material into those locations last year, the executive says.