Officials' waste strategy backfires as Chinese buyers reap the benefits of their scraps: 'Can afford to pay much higher prices'

The aluminum recycling industry is heating up, and European processors are facing some stiff competition, according to the Financial Times. 

What's happening?

European aluminum scrap recyclers are running out of scrap because of subsidized purchasing from China. About 15% of European furnaces have been offline due to a lack of supply. Meanwhile, Chinese operators have been able to ship the finished product back to Europe, which reliably pays a premium for recycled content.

Europe's 2024 aluminum exports were 53% higher than in 2019, according to European Aluminium.

"We are very efficient in Europe in the collection of scrap. We have the best technology, we have made investment, and now we need to make sure that we are retaining as much as possible the scrap which is collected, and not allowing it to flow outside of Europe," said Emilio Braghi, executive vice president of aluminum recycler Novelis, per the Financial Times. "Subsidized overcapacity is creating unfair competition, as they [China] can afford to pay much higher prices for the scrap."

Why is aluminum recycling important?

China could establish a monopoly on aluminum, making Europe dependent on it for a vital resource. The aluminum-can market is projected to be worth $94.5 billion by 2035.

Recycling scrap aluminum is less costly and more environmentally friendly than using virgin resources. The energy needed to mine and process ore is high, and that energy often comes from polluting sources such as coal or gas. 

The industrial pollution of creating fresh aluminum contributes to increasingly destructive weather patterns such as floods, droughts, and wildfires. The costs of those disasters are borne by homeowners, farmers, and society at large. 

What's being done about aluminum recycling?

European Union trade commissioner Maroš Šefčovič pledged to limit exports of aluminum scrap to secure the domestic supply. He said fresh measures will be launched this spring.

"We want to prepare a balanced measure that will allow industries using aluminium to access adequate quantities of this strategically important material at competitive prices, in order to pursue their path toward decarbonization, fully in line with a circular economy logic," said Šefčovič.

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