AMU's monthly roundup: Midwest premiums, tariffs, and lots of scrap news

Tariffs have thrown Midwest premiums into a spin. Take a look at what happened in June, when premiums approached 70¢ per pound (¢/lb) before falling to the upper-50¢/lb range. By the end of the month, premiums climbed back up to 72¢/lb. This volatility is having a big impact on importers’ supply, sales, and fees. AMU’s Greg Wittbecker takes a look at what’s happening.

Imports of unwrought aluminum have dropped steadily since March, when many companies rushed to purchase materials ahead of the implementation of tariffs. March reached the highest level of imports for the year so far at 426,911 metric tons (t), a spike of 47.5% compared to the same month last year. However, imports have ticked downward since the burst of buying in the spring, falling to 199,760t in July, according to preliminary data at the time. The Department of Commerce figure has since been revised to 200,541t. That’s a 32% drop from July 2024.

Here’s an excellent guide for what exactly the Section 232 tariffs apply to. AMU’s Nicholas Bell took a deep dive into what the import taxes mean for semi-fabricated aluminum, and for derivatives like appliances, vehicles, and tools, as well as for electric industry line items like transformers, wire, and cable.

Container rates continue to fall, declining for 10 consecutive weeks. The effect of substantial front-end loading of transpacific freight from China and Southeast Asia appears to lingering, but demand remains weak for many carriers. Some had expected rates to stabilize after the U.S. extended its temporary 10% tariff on Chinese goods until Nov. 10. However, the U.S. Trade Representative fees on Chinese-built or Chinese-owned/operated vessels are still scheduled to go into effect on Oct. 14. These fees – $50/t on Chinese-owned or operated vessels, and $18/t on Chinese built-vessels – are acting as a brake on charters into U.S. ports.

Company news

Nemak’s aluminum engine block and cylinder head manufacturing facility in Monclova, Coahuila is closing, according to coverage from El Siglo de Torreón. The facility specializes in aluminum engine blocks used by automotive companies. But this is about more than just a single plant shuttering. Nemak is reshuffling its operations, with its recent purchase of Switzerland-based GF Casting Solutions and its plans to build a mega-casting facility in Georgia.

Century Aluminum plans to bring back online idled production capacity at its Mt. Holly smelter in South Carolina. The Chicago-based producer plans to invest approximately $50 million in the effort, adding about 10% of capacity to U.S. production. A restart will enable the plant, currently operating at a 75% utilization rate of its 230,000t per year (t/yr) nameplate capacity, to achieve full production by June 30, 2026. Century said the plant hasn’t operated at that maximum capacity utilization since 2015.

So, we have one smelter restarting. Will more follow suit? That outlook is still murky. Here’s where other facilities stand.

The Illinois Commerce Commission has approved Ameren’s Central Illinois Grid Transformation Program. Ameren expects to start construction in late 2025 on 380 miles of new and upgraded high-voltage lines. Ameren’s project is just one of many such projects in the U.S., as the power industry gears up to address the growing demand.

GE Appliances announced a sweeping $3 billion, five-year plan to expand and modernize its U.S. manufacturing footprint, boosting capacity across 11 facilities in Kentucky, Alabama, Georgia, Tennessee, and South Carolina. For U.S. aluminum suppliers, particularly die casters producing high-strength A380 and A356 alloys for appliance components, the combination of new domestic capacity and import displacement could realign orders flows across the consumer durables sector.

A court found in favor of Kaiser Aluminum in a lawsuit in which the aluminum producer sued U.S. Magnesium over a breach of contract. A jury returned a verdict for a Kaiser subsidiary Kaiser Aluminum Warrick, rejecting U.S. Magnesium’s argument that the Salt Lake City-based company couldn’t fulfill its contract when it declared a force majeure related to equipment failure. U.S. Magnesium said it couldn’t make repairs due to Covid-related supply disruptions. According to a judgment entered by the court on Aug. 8, U.S. Magnesium is required to reimburse Kaiser $55 million for higher costs Kaiser Warrick incurred when it had to source magnesium from the spot market at prices above its original contract, plus about $12.9 million in prejudgment interest.

Recycled metal

Novelis and DRT Holdings are working together to accelerate the adoption of high-recycled-content aluminum alloys for use in beverage can ends. The partnership will focus on refining manufacturing processes to enable “uni-alloy” design approaches that can incorporate up to 99% recycled content, reducing reliance on primary aluminum in end stock production for decarbonization purposes while cutting input costs.

A bill introduced into the U.S. House of Representatives is targeting recycling infrastructure and manufacturing. U.S. Reps. Tom Suozzi, (D-New York), and Brian Fitzpatrick, (R-Pennsylvania), introduced the “Cultivating Investment in Recycling and Circular Local Economies (CIRCLE) Act”, which would establish a 30% tax credit for investments in recycling infrastructure.

Waste Management forecasts that 400 landfills will close in the next 15 years, removing 150 million short tons of capacity. Approval of new landfills is increasingly difficult, and there are more restrictions on what can be disposed of. It contradicts traditional thinking that abundant landfill capacity exists and that tipping fees remain cheap. Both factors are often cited as a reason why recycling rates have struggled for so long. So, Waste Management is spending a lot of money on its recycling capabilities. And it’s not alone. The other major players in the sector, such as Republic, Waste Connections, GFL Environmental, and Casella are also targeting investments to boost recycling capacity.

“If you only skimmed the original press release, you’d be forgiven for thinking this was another sustainability-themed ribbon-cutting. Dig a little deeper, and this new facility, with its zero-waste dross recovery model and rail-connected footprint, starts to look like a potential disruptor in the regional aluminum scrap and melting economy.” A new player is shaking up the South-Central U.S. scrap map, more specifically the Texas-Oklahoma region. Aluminz, an upstart aluminum recycler, is opening a high-capacity dross and salt cake processing facility in Mt. Pleasant, TX, with ambitions to send zero waste to landfill. From Real Alloy’s Sapulpa site to Hydro Extrusions’ Commerce plant and even Emirates Global Aluminium’s new smelter in Oklahoma, Aluminz’s entry raises fresh questions about who’s competing, who’s partnering, and how quickly this fast-evolving regional network could reshape the secondary market.

The United States has a lot of metal that’s not being fully used. Just think of all the used beverage cans that end up in landfills rather than scrap yards. And it’s one of the many factors that come into play when debating the pros and cons of a ban on recycled metal exports. In our most recent webinar, AMU experts Greg Wittbecker and Nicholas Bell discussed the impact of looming scrap export restrictions, why recycling rates in the U.S. are so dismal, and scrap buying spreads.

In offbeat news

A group of Kentucky residents are suing an aluminum rolling mill, arguing that a gnat infestation in the neighborhood is due to the company’s recycling operations. According to the lawsuit, Russellville, Kentucky-based Logan Aluminum in 2019 began storing bales of compressed aluminum cans outdoors on its property that contained flying insects. The lawsuit says the infestation is so bad that they can’t “use the bathroom without gnats crawling on their bodies,” food is covered in bugs, and rest is “impossible due to gnats flying up their nose or down their throat.” The company denies that it is the cause of the problem.