Aluminum Recycling and Sustainability: New Trade Measures for Scrap Needed

The entire European aluminum value chain welcomed the European Commission's recent targeted consultation on possible trade measures to ensure sufficient availability of aluminum scrap on the EU market. Both the March 2025 Steel and Metals Action Plan and the measures contained in RESourceEU recognize the strategic importance of aluminum scrap for decarbonization objectives and the implementation of a truly effective circular economy.

The light metal sector's transition to carbon neutrality depends crucially on increased use of recycled aluminum, especially considering that secondary production generates up to 95% fewer CO2 emissions than primary production. Aluminum recycling for sustainability is therefore essential both to achieve the environmental targets already set by the EU and to achieve real strategic autonomy.

Ensuring access to adequate quantities of aluminum scrap at competitive prices within the EU is a key prerequisite for building a truly resilient, low-emissions light metal supply chain.

Market developments and challenges for the circular economy in foundries

Data collected by the European Commission's import and export surveillance system confirm the high level of aluminum scrap exports to third countries. In 2024, approximately 1.2 million tonnes were exported—a 66% increase compared to 2014—and last year's figures are no different. Approximately 80% of aluminum scrap from the EU goes to Asia, particularly India, China, Thailand, and Pakistan.

At the same time, industry analysts have noted significant increases in aluminum scrap prices, a factor that is generating growing tensions in the EU market and impacting both the availability and affordability of scrap for recyclers and downstream users. US tariffs have also created further pressure on this market, as will the entry into force of the CBAM, which will increase the appetite for scrap from third countries eager to decarbonize their domestic production.

It is clear that strong demand from third countries with lower operational and environmental standards, combined with state subsidies to companies in the sector and growing price and trade distortions, risks diverting valuable secondary raw materials beyond the EU's borders precisely at a time when domestic demand is rapidly growing. This dynamic seriously undermines the circular economy in foundries and throughout the entire European light metal supply chain.

Targeted EU action is needed to decarbonize the metals industry

In an integrated internal market, uncoordinated national approaches would be ineffective and potentially distortive within the Union, so EU-level action is the only viable alternative. Ensuring sufficient availability of aluminum scrap in the EU is essential for the major initiatives launched, including the Fit for 55 package, the Circular Economy Action Plan, the CBAM, and the Critical Raw Materials Act.

Without adequate access to scrap, European producers will always face higher costs, lower competitiveness, and slower decarbonization of the metals industry, compromising the EU's established industrial and environmental policy objectives.

In this context, market intervention through trade policy that can address the distortions caused by unfair practices and policies of third countries is justified, necessary, and useful to prevent a critical shortage for Europe's green and industrial transition.

The Right Policy Approach: Export Tariffs

The European aluminum industry believes that the Commission should currently prioritize price-based trade measures, addressing the root cause of the market imbalance resulting from growing price arbitrage between EU and third-country markets, which is driving excessive scrap exports.

The most desirable option is a global export tariff on aluminum scrap (CN 7602), the best solution to ensure a fair and functional scrap market. Based on various market analyses, an export tax of at least 30% appears necessary to restore a level playing field for the EU aluminum recycling industry.

A scrap export tariff is the most proportionate, flexible, and legally sound instrument available to the European Commission for the following reasons:

• Effectiveness: It would directly reduce the price arbitrage that incentivizes the exit of scrap from Europe without completely banning exports. Given strong global demand, aluminum scrap exports would continue, but at volumes compatible with EU industrial needs.
• Legal certainty: Export duties are explicitly permitted by WTO law and are not prohibited by Article XI of the GATT. The European Union has not undertaken any WTO commitments that limit its ability to impose export duties on aluminum scrap, making this option fully compatible.
• Proportionality: Unlike quantitative restrictions, an export duty does not impose rigid volume limits and allows market participants to dynamically adapt to changing conditions.
• Administrative simplicity: Because it is applied at the time of export, a duty tariff is simple to manage and monitor, building on existing customs systems.
• Policy coherence: By moderating rather than banning scrap exports, this measure aligns with EU objectives regarding the circular economy, the environment, and strategic autonomy, while safeguarding ongoing and planned investments in the Union's recycling capacity.

It is important to emphasize that the envisaged situation would not lead to a buildup of scrap within the EU. Global demand structurally exceeds supply, and third-country buyers would still absorb part of our production, albeit at prices that reflect the strategic value of this resource for Europe's decarbonization journey.

Monthly Tariff Rate Quotas as an Alternative Option

If the Commission deems an export duty not applicable at this stage, tariff rate quotas (TRQs) would be a desirable alternative. While these can provide a certain degree of predictability, they are inherently more rigid and administratively complex than export duties and risk creating artificial scarcity effects if not carefully calibrated. Therefore, they should be considered only as a fallback solution.

Specifically, the adoption of a TRQ system should:

• Cover all types of aluminum scrap and be established globally to avoid the risk of circumvention;
• Be applied universally, to avoid trade diversion between destinations, and on a monthly basis, to facilitate export flows and prevent frontloading;
• Be established with reference to EU exports prior to 2018, i.e., before the structural market distortion caused by third countries;
• Be designed as a two-stage tariff-rate quota system, including an in-quota duty and an out-of-quota duty;
• Exclude any possibility of carrying over unused quotas from one month to the next, as this would undermine the objective of stabilizing domestic availability;
• Be temporary, subject to periodic review to assess its effectiveness and ensure its intended functioning over time, adapted to market developments.

Conclusions: Restoring a level playing field for the European circular economy

Current market developments demonstrate the need for targeted EU action to ensure that aluminum scrap remains available, at competitive prices, for European industry.

The Commission should prioritize an export duty on scrap as the most effective and proportionate response, while maintaining strictly defined monthly tariff-rate quotas as an emergency option. This solution is best suited to restoring a level playing field for the EU aluminum recycling industry, while preserving trade flows and complying with international obligations.

Aluminum recycling and the sustainability of the entire European supply chain depend on guaranteed access to secondary raw materials, a key element for the circular economy in foundries and the successful decarbonization of the European metallurgical industry.

Source: A&L Aluminum Alloys Pressure Diecasting Foundry Techniques