Highlights

  • The benchmark for US used beverage can scrap closed Q3 at US$2,614.84/t on 30 Sep, up 11.46% over the quarter; no later figure is available.
  • UBC tracks LME aluminium plus the US Midwest premium, which 50% tariffs hold near 105 US c/lb; the high US price is also pulling European scrap into America.
  • Watch the Midwest premium after the midterms, LME aluminium near US$3,000-3,100 and seasonal scrap flows into winter.

Used beverage cans are the cheapest feedstock for America's sheet mills, but tariffs on primary metal have made them a lot more valuable this year.

What happened

The benchmark for US used beverage can scrap, which underpins the LME's UBC contract, ended the third quarter at US$2,614.84 a tonne on 30 September. That was 11.46% above the 31 July close of US$2,345.92.

Monthly averages tell the same story. July averaged US$2,322.89, August US$2,491.22 and September US$2,602.51, a rise of 4.47% between August and September and roughly 12% across the quarter.

The path was bumpy. The benchmark dropped from US$2,464.98 on 1 July to a low of US$2,270.76 within days, recovered above US$2,500 on 11 August and peaked at US$2,622.98 on 10 September before ending the month slightly lower.

No dated UBC benchmark is available for October or November, so the picture leans on the parent markets: LME aluminium and the US Midwest premium. Any read on the past two weeks is inference rather than a fresh price.

Why it happened

UBC is priced against what it replaces. Can scrap tracks the LME price and the US Midwest benchmark, though not in a straight line, and recycling uses only about 5% of the energy of primary smelting.

The US benchmark is inflated by tariffs. Washington applies a 50% Section 232 duty to most primary aluminium imports, and the Midwest premium stood at 105 US cents a pound on 6 November, roughly US$2,315 a tonne on top of the LME price, computed from the cents figure. Scrap collected at home avoids that duty.

The high US price is drawing scrap across the Atlantic. European aluminium scrap exports to the US rose 243%, tied to the higher US UBC benchmark, raising worries that European recyclers will run short.

Seasonality also plays a part. Falling can consumption after the holidays tends to tighten scrap early in the year, while better scrap generation and softer mill Demand loosen it at other times.

How it plays out

Since the end of September, primary aluminium has stayed firm but choppy. LME cash settled at US$3,137 on 10 November, up 2.7% from 9 October, with stocks at 226,850 tonnes. Three-month metal touched a three-week low on 10 November, then rebounded 1.3% to US$3,050.

Winners are can collectors, scrap dealers and secondary smelters selling into a tariff-protected market. Losers are can-sheet mills, which pay more for feedstock, and European remelters losing material to US buyers.

There are headwinds for the primary price that sets the tone for scrap. Hawkish Federal Reserve expectations, a faster-than-expected restart of Middle East smelters and new Indonesian capacity are the main negatives, with low LME stocks the main support.

The biggest swing Factor is policy. The Democrats' midterm sweep weighed on metals sentiment this week, and a renewed prospect of Tariff relief for Canada has been flagged. A lower Midwest premium would likely pull UBC down with it, though Alcoa has argued a Canada-only cut would not flatten the premium.

Next week, watch for a fresh UBC benchmark print, the Midwest premium, LME aluminium against the US$2,950 to US$3,090 forecast range and any Washington tariff signals.