Aluminum Demand & Supply 2026: Trade Flows, Scrap Recycling & Regional Outlook

1. How the aluminium market structure changes in 2026 — the big picture

Two forces will shape aluminium flows in 2026:

• Decarbonisation + policy — carbon pricing, CBAM (EU), and corporate net-zero targets push buyers toward low-carbon metal and recycled content. This increases demand for secondary aluminium and creates premia for traceable/low-embodied-carbon metal. European Aluminium
• Trade & logistics dislocations — tariffs, export-control moves, regional shipping cost swings and port congestion can create physical regional tightness even when global paper prices are calm. The LME headline price is relevant, but local premiums and scrap spreads will matter more for traders and processors. Reuters

Implication: traders and manufacturers must manage two price signals — (a) exchange/LME reference and (b) regional physical premia and alloy spreads (ADC12, ingots, billet). For scrap yards, quality and certification will decide realized value.

2. Primary vs Secondary — why recycled aluminum is central in 2026

Energy and carbon advantage: Secondary aluminium typically uses 70–95% less energy and CO? vs primary smelting. That means buyers (especially in Europe and brand-conscious OEMs) will pay to secure secondary feedstock that evidences low CO?. European Aluminium
Cost advantage & resilience: With primary smelters facing higher energy costs and some regional curtailments, secondary supply is the quickest lever to expand available metal. Traders should therefore treat scrap as a core traded commodity, not a sidelined stream.

Actionable for LOHAA users:

• Build relationships with certified scrap suppliers and invest in alloy-grade sorting (less copper contamination, higher UBC capture).
• Track ADC12/ADC06 and LM-series alloy spreads — these determine cast alloy margins for foundries.

3. Region-wise outlook (demand, supply, trade flows & risk)

3.1 China — the demand engine & scrap importer

• Snapshot: China imported ~1.8 Mt of aluminum scrap in Jan–Nov 2025 (GACC), with monthly surges and diversified suppliers (Thailand, UK, EU, Japan). That pace makes China the largest single buyer of secondary metal and a key price-setter for scrap. alcircle
• Drivers: EV electrification, renewables grid hardware, continued fabrication/export manufacturing, and substitution of scrap for primary in constrained smelter environments.
• Trade signals: Tightness in global clean UBC and cast scrap will push China to source from Southeast Asia, Europe and Japan; shipping cost and inspections remain watchpoints.

Practical for traders:

• Prioritise guaranteed-quality consignments (certificate + chemical assay) for shipments bound to Chinese secondary mills.
• Watch seasonal shipping windows (Lunar New Year logistics slowdown).

3.2 Asia (India & Southeast Asia) — fast demand growth, processing hub

India

• Trajectory: India’s primary production was around 4.2 Mt (est.) in recent years and consumption is accelerating with infrastructure and vehicle electrification. Domestic recycling is growing but insufficient, so imports of scrap and semi-finished alloys are rising. JMK Research
• Policy: India is debating duty tweaks and tighter quality norms for imports to protect domestic capacity — traders should factor sudden policy moves (e.g., duty hikes) into contract terms. MySteel

Southeast Asia

• Export-oriented processing hubs (Vietnam, Thailand, Malaysia, Indonesia) continue to receive clean scrap, perform secondary processing, and export semi-finished product to China and the Gulf.

Practical steps:

• Establish multiple origin options (US, EU, Japan) for scrap to keep supply flexible.
• For sellers in Europe/US, screening buyers for stability and KYC reduces counterparty execution risk.

3.3 Europe — policy-driven tightness & premium for low-carbon metal

• CBAM & downstream rules: The EU’s CBAM and downstream extension plans increase demand for low-carbon documented metal; meanwhile record EU scrap exports (≈1.26 Mt in 2024) have stressed internal availability. Fastmarkets
• Implication: Expect higher domestic scrap prices, potential restrictions or paperwork increases for exports, and a premium for decarbonized/traceable metal.

For LOHAA users:

• Suppliers in Europe can capture premiums by offering certified carbon-profiled material.
• Exporters should prepare for tightening paperwork and potential anti-circumvention measures.

3.4 USA — high recovery, strong secondary ecosystem

• The US retains high UBC recovery rates and significant secondary processing. Scrap flows out (to Asia) remain sizable but domestic demand for reshoring and defence/manufacturing may keep more metal at home.
• Trade/tariff rules and premium structures mean spreads between US domestic value and export offers can widen.

Trader tip:

• Use regional spreads to arbitrate: buy US clean UBC for domestic billets or export to Asia where premium exists — but always model freight, duties and inspection time.

3.5 Gulf & Middle East — low-cost primary and downstream growth

The Gulf remains a primary cost-advantaged supplier, expanding downstream rolling and extrusion capacity. They will import select scrap for blending to meet alloy specs and decarbonization targets where needed.

Practical:

• Gulf buyers often compete for lower-cost primary; secondary sellers should target semi-fabricators in the Gulf offering steady offtake.

4. Scrap types, grades and where the money is in 2026

Key scrap categories that will command premiums:

• Clean UBC (Used Beverage Cans) — highly prized for can-makers & beverage brands.
• Old Cast / High-quality cast scrap (low Cu) — required for ADC/LM alloy production.
• Extrusion & Mill scrap (clean, segregated) — used by extruders for billets.

Quality matters more than volume in 2026. Contamination (copper, zinc, plastics) will reduce value sharply because reclamation costs eat margin.

5. Prices, spreads & metrics to watch (practical dashboard for traders)

• LME aluminium — headline reference for financing and hedging; short-term moves still relevant. (Reference LME pages & live boards). Lme
• Regional physical premiums — Europe/East Asia/US cash premia to LME for immediate delivery.
• Scrap import flows & monthly GACC/SMM data — monitor China’s monthly customs figures for incoming demand signals. alcircle
• Alloy premia (ADC12, LM6) — for foundry feedstock economics.
• Freight & insurance (war-risk/route-risk) — Red Sea, Cape detours, port congestion — factor rapidly.

6. Region-wise tables & quick data summary

7. Trade risks, policy watchlist & compliance

• EU CBAM downstream expansion — expect increased documentation for embedded carbon in metal imports/exports; potential anti-circumvention rules for recycled content. Taxation and Customs Union
• Export restrictions or paperwork increases — the EU and other jurisdictions are reviewing scrap export rules to preserve domestic circularity. FastMarkets flagged EU moves to restrict aluminium scrap exports. Fastmarkets
• Customs inspections & quality verification — increased scrutiny on scrap shipments requires robust assay/certification.
• Freight & route-specific geopolitical risk — shipping bottlenecks materially change landed costs; model multiple routes in contracts.

8. Practical strategies for LOHAA customers (traders, scrap yards, manufacturers)

For traders

• Use multi-origin sourcing (US, EU, Japan, SE Asia). Layer longer-dated fixed volumes with spot exposure.
• Build pricing clauses for inspections, freight shifts and local duties to avoid margin squeeze.
• Monitor GACC monthly import data and European scrap flows weekly — they are leading indicators for regional premiums. alcircle

For scrap yards

• Invest in better sorting (shredders, eddy current separators) and digital QC to certify low-Cu cast scrap and UBC.
• Offer carbon/traceability documentation to capture CBAM/low-carbon premia.

For manufacturers & foundries

• Secure fixed feedstock contracts for ADC12/LM6 alloy grades.
• Consider in-house sorting or tolling arrangements with scrap suppliers to reduce alloy volatility.

9. Forward risks & scenarios (short note)

• Bull case: Energy costs fall, primary restarts and policy clarity combine to lower premiums — but recycled demand still grows.
• Base case: Secondary continues to gain share, regional premiums stay elevated; LME drifts with macro but physical spreads persist.
• Bear case: Sudden export restrictions or logistics shocks (port closures) cause local scarcity and price spikes — worst for unhedged buyers.

10. Conclusion — what matters most for 2026

• Control quality, documentation and logistics. Those are the three variables that will define profit/loss in 2026.
• Treat scrap as primary feedstock. Secondary aluminium is central to supply resilience and ESG compliance.
• Use LOHAA tools: verified KYC counterparties, multi-origin sourcing and region-specific intelligence are competitive advantages.

References & suggested reading (web news / reports used)

• GACC / China scrap imports (Jan–Nov 2025 reporting): Alcircle / MySteel coverage — China’s Jan–Nov aluminium scrap imports up 12% YoY. alcircle
• LME Aluminium official pages — market reference & contract details. Lme
• FastMarkets — EU moves to restrict aluminium scrap exports (analysis of flows and policy). Fastmarkets
• Ramboll report for European Aluminium — study on CBAM impact on alumina & scrap markets (PDF). European Aluminium
  JMK Research / India aluminium sector report — green procurement and production figures (India context). JMK Research
• SMM / Shanghai Metals Market summary — China scrap import datapoints and flows (SMM coverage). Metal.com
• Reuters — LME metals year review and price drivers (market context). Reuters