Week in review: Holding pattern or breaking point?

The 50% tariff on aluminum left recycled metal out of the equation, and that’s created a new trade lane that’s now wide open. Clean material is rushing in from Europe, and EU officials are calling it “scrap leakage.” They’re already making noise about export restrictions. That would shut the door on a lot of U.S. buyers who’ve come to rely on European feedstock. So, if your purchasing strategy is built on that inflow, it’s time to start rerouting.

Who’s winning and who’s getting squeezed

Midstream processors that convert clean feed into semifinished goods are still sitting in a good spot. But that’s not where most people live. OEMs and fabricators are getting hammered on cost and lead times. Quotes are getting shorter. Order books are getting thinner. And this is happening while freight and macro indicators are flat. It feels a lot like 2018 again, but this time no one’s bullish. There’s no upside surprise coming, just more pressure.

Quotas could shift the map

Mexico and the U.S. are close to finalizing a new quota agreement. If that lands, we’ll get a two-tier system, quota volumes come in lower cost, and everything else is slapped with the full 50%. That could give some downstream buyers a lifeline, especially those sourcing from North American partners. But don’t count on Canada, they’re not playing ball, and if they retaliate, this could get messier before it stabilizes.

China’s in its own lane

While we’re all watching premiums spike, China launched cast aluminum alloy futures and hasn’t flinched. Their scrap market is steady, buyers are cautious, and prices haven’t moved much. They’re not chasing our volatility, and that could split global pricing into two tracks, one volatile and political, the other stable and regional. Something to watch as Asia’s secondary market matures.

Downstream flashpoints

While auto is week, we see that construction is hanging in, but just barely. Conversion fees are holding, but only because mills are trying not to blink first. And we’re starting to see the early signs of substitution. Coca-Cola and other brands are flirting with plastic to escape the premium pain. But resin prices aren’t a stable haven either. Meanwhile, Freeport is warning that copper could be the next trade war casualty. It’s all connected.

What to watch going forward

• EU action on scrap exports – July could be a turning point
• Mexico quota deal – Final terms will tell us who gets relief
• Demand elasticity – How many buyers can actually stomach 70¢
• Buyer behavior – Shortened quotes, sourcing shifts, and substitution creeping in
• Copper’s tariff risk – Freeport’s sounding the alarm. Why watch copper? Copper tariffs could spark a substitution rush into aluminum, squeezing billet supply and distorting demand just as downstream buyers are already on edge.