Secondary Aluminium Sourcing in 2026: CBAM, the EU Scrap Duty and a 36-Year Low in LME Stocks

The European Commission plans to present its proposal for a 15% duty on aluminium scrap exports on 9 September 2026. The date matters for secondary aluminium sourcing on two continents, because the material the bloc wants to keep at home is the same material that recyclers in Latin America and Asia are bidding for. However, a proposal is not a rule, and that gap is where the planning errors happen.

The figures behind the file are public. Argus Media reports that EU aluminium scrap exports rose 50% between 2019 and 2024, to 1.2 million tonnes, and reached 1.27 million tonnes in 2025. Indian buyers have regularly bid more than 15% above European domestic prices. Therefore the tonnes leave, and European recyclers compete against export parity for their own feedstock.

Meanwhile the exchange offers no cushion. LME aluminium stocks fell to 250,000 tonnes, the lowest level since November 1990, OilPrice reported on 12 August. Aluminium in London traded at USD 3,373 per tonne, up close to 2%, while copper passed USD 14,000 per tonne. Hydro warned that the annual deficit could exceed 900,000 tonnes if disruptions in the Strait of Hormuz persist. Nothing here is a recommendation to buy, to sell or to hedge, and nobody knows where the price goes next.

Two dates sit in this file, and only one is in the headline

The 9 September date belongs to the proposal. Argus Media reports that a consultation process follows it, which would push real implementation into 2027. So a buyer who assumes an immediate effect manages inventory against a rule that does not exist yet.

The opposite mistake costs money as well. Anticipation moves scrap prices before a norm is in force, because sellers reprice the option to export. In short, the regulation is a 2027 question and the price is a 2026 one. For secondary aluminium sourcing, that distinction is the whole point.

Why CBAM reshapes secondary aluminium sourcing

CBAM entered its definitive period this year. The certificate price was EUR 75.36 per tonne of CO2 in the first quarter of 2026 and EUR 75.28 in the second, according to AL Circle. The free allocation adjustment stands at 10% in 2026, 20% in 2027 and 30% from 2028. Certificates only become available in February 2027, although 2026 imports already fall under the definitive regime. The exemption threshold is 50 tonnes per year.

The gap that matters sits in the emissions factor. For unalloyed aluminium under CN code 7601, the same article cites embedded emissions of 2.057 tonnes of CO2e per tonne for Bahrain and 0.396 for Bolivia by the secondary route. Multiply that difference by roughly EUR 75 and the advantage of recycled metal into Europe stops being an argument about sustainability. It turns into a line in the landed cost.

That is the same material the export duty would keep inside the bloc. Secondary aluminium sourcing into Europe therefore faces a pull in two directions at once. Carbon rules favour the recycled tonne, while trade policy restricts its movement.

What the supplier has to hand over

On 14 August the Commission published 10 guidance documents, 4 general and 6 sectoral, with one specific to aluminium. The Directorate-General for Taxation and Customs Union addressed them to operators outside the EU, to authorised CBAM declarants and to verifiers. They cover monitoring plans, embedded emissions calculation, the free allocation adjustment and verification of 2026 imports.

The practical consequence lands on the purchase order. If the mill does not deliver emissions data verified by an accredited third party, default values apply instead, and default values are almost always worse. So the emissions annex now belongs in the contract, next to the specification and the tolerance.

Scrap does not follow primary metal in a straight line

Data from Shanghai Metals Market, published by AL Circle, sets the reference. On 25 August 2026 the LME three month contract closed at USD 3,218.50 per tonne, and the SHFE 2610 contract closed at 23,815 RMB per tonne. Aluminium ingot inventory in China’s consumption regions stood at 860,000 tonnes on 24 August, 15,000 tonnes below the previous week and 26,000 tonnes below a month earlier.

The spreads carry the sourcing story. In Foshan the gap between A00 and unpainted mixed extrusion scrap was 2,305 RMB per tonne, while the gap against shredded scrap was 1,084 RMB per tonne. Those two numbers move on their own logic. A buyer who indexes a secondary purchase to the LME alone therefore pays for a correlation that does not hold.

One more figure shows where the tonnes are going. Chinese aluminium scrap imports reached 119,600 tonnes in July 2026, against 133,000 tonnes in June. In other words, the main alternative destination for European material was already buying less, month over month, before any duty existed. Secondary aluminium sourcing decisions taken on last year’s trade map will therefore misread both ends of the flow.

Primary aluminium cost is born upstream, in the gas

Norsk Hydro reported that its Alunorte refinery cut alumina production to 50% after an interruption in natural gas supply from CELBA, part of New Fortress Energy Inc, RTTNews reported on 11 August. The company put the potential financial impact for the third quarter of 2026 at USD 75 to 100 million, including spot gas purchases above the contracted price. The plant returns to full capacity once gas availability normalises.

For a purchasing desk this is a reminder about where cost actually starts. Alumina calcination burns gas, so an energy problem in Brazil eventually reaches a billet price in Mexico or in Spain. Our primer on how aluminium goes from bauxite to the factory walks through that chain. Moreover, when primary supply tightens upstream, the pressure moves to secondary, which is exactly the material under discussion in Brussels.

Latin America sits between two policies that push the same way

North America is tightening from the other side. The United States maintains a 50% Section 232 tariff on steel and aluminium, raised from 25% in June 2025, according to Expansion. Pedro Casas Alatriste, director general of the American Chamber of Commerce Mexico, said all three scenarios on the table are positive and possible, but that he expects a reduction rather than an elimination. He also noted that Mexican exports to the United States under the trade agreement went from 40% to nearly 90%.

Economy Secretary Marcelo Ebrard Casaubon said Mexico has asked that no new tariffs arrive while the review talks continue. AmCham anticipates a gradual reduction between September and November. Read alongside the European file, the picture is consistent. Europe wants to retain its scrap, while North America keeps taxing finished metal. Both policies raise the cost of the tonne that crosses a border.

A checklist for secondary aluminium sourcing before 9 September

The vote has not happened, and no forecast would survive it. What a purchasing desk controls is the paperwork and the origin. Five items in any secondary aluminium sourcing file deserve a review this week.

• The tariff classification of scrap and of secondary alloys in each destination country, because a change of code changes both the applicable duty and the CBAM treatment.
• Who absorbs a new export duty on tonnes already under contract, and at which point of the delivery chain that happens.
• Whether an LME indexed contract assumes physical availability, given registered stocks at a 36 year low.
• Whether the supplier can produce emissions data verified by an accredited third party, or whether default values will apply by omission.
• Force majeure and price adjustment clauses, in light of Alunorte and of the Strait of Hormuz.

The commercial terms deserve the same pass. Our note on CIF versus FOB works through the incoterm question for another material, and the logic transfers without changes. The guide to alloy series then covers what a given scrap grade lets you produce, which decides whether a cheaper tonne is usable at all.

Allinx quotes material delivered at destination, reviews origin and applicable duty, and moves the cargo with the group’s own logistics. If secondary aluminium sourcing into Europe or Latin America sits on your desk this quarter, a conversation before 9 September costs less than a renegotiation after it. Talk to the desk.