At the 2025 SMM (2nd) Global Renewable Metal Industry Chain Summit – Main Forum hosted by SMM Information & Technology Co., Ltd., Allen Cui, Director of SMM Nonferrous Consulting, shared insights on the topic of “Prospects for the Development of the Global Secondary Metal Industry.” Regarding secondary aluminum, he stated that over the past decade, the proportion of secondary aluminum production in developed countries such as North America, South America, Europe, and Japan has been significantly higher than that in developing countries. As developing countries benchmark against developed countries, the future potential for aluminum scrap demand will be even more substantial. From 2022 to 2042, SMM expects the compound annual growth rate (CAGR) of extruded aluminum scrap to reach approximately 5%. By 2042, extruded aluminum scrap is projected to account for about 33% of total aluminum scrap. Regarding secondary copper, he forecasts the global copper scrap market size to grow at a CAGR of 4.2% from 2024 to 2030.
Background
Secondary metals offer significant advantages, with notable energy-saving and emission-reduction effects.
Comparison of Energy Consumption and Emissions between Secondary and Primary Metals
As clearly shown in the figure, secondary copper, aluminum, and lead save 27%, 38%, and 21.9% respectively in energy consumption compared to primary metals. In terms of water consumption, secondary metals save 500%, 220%, and 200% respectively compared to primary metals.
This demonstrates that secondary metals have significant effects in energy conservation and emission reduction compared to primary metals.
With the development of automotive lightweighting technology, the application of secondary aluminum in passenger vehicles is increasing.
According to SMM, in plug-in hybrid car models, the aluminum usage per vehicle is around 210 kg, with a relatively high proportion of secondary aluminum. In pure electric vehicles, the aluminum usage per vehicle is around 190 kg, with an even higher proportion of aluminum used for AI applications. In internal combustion engine vehicles, the aluminum usage per vehicle is around 156 kg, with a similar proportion of secondary aluminum to that in plug-in hybrid models.
Overall, automotive aluminum alloys account for about 53%, while aluminum alloys for AI applications account for about 38%.
Secondary aluminum
Over the past decade, the proportion of secondary aluminum production in developed countries such as North America, South America, Europe, and Japan has been significantly higher than that in developing countries. Similarly, for developing countries, benchmarking against developed countries, the future potential for aluminum scrap demand will be even more substantial.
According to SMM, China, the US, Europe, and India are the major aluminum scrap producing regions, collectively accounting for about 80% of the total. Benefiting from global carbon reduction policies, recycling systems in various countries are continuously improving. In the future, aluminum scrap production will continue to grow.
According to SMM data, in 2022, the production of rolled aluminum scrap exceeded that of extruded and cast aluminum scrap, becoming the largest category among the three types of aluminum scrap. However, it is expected that extruded aluminum scrap will experience the fastest growth rate in the future. From 2022 to 2042, SMM anticipates that the compound annual growth rate (CAGR) of extruded aluminum scrap will reach approximately 5%. By 2042, extruded aluminum scrap is expected to account for about 33% of total aluminum scrap.
The global aluminum scrap export structure remains stable, but due to the impact of carbon reduction targets, global exports have been on an upward trend since 2020.
From 2015 to 2016, US aluminum scrap exports declined significantly, primarily due to the rapid growth of the US recycling industry at that time, which led to a shortage of domestic scrap supply and a reduction in exports.
Due to rapid industrialization and China’s ban on the import of low-grade aluminum scrap in 2018, India has become the world’s largest importer of aluminum scrap.
Since 2018, China has implemented strict import policies, banning the import of low-grade aluminum scrap, which has led to a significant decline in scrap imports. With the relaxation of policies after 2020, China’s aluminum scrap imports have rebounded.
India’s high economic growth rate has led to an increase in demand for various raw materials. Coupled with low labor and environmental protection costs in India, the total volume of its aluminum scrap imports is substantial.
The main sources of aluminum scrap in China include PIR scrap generated during the production process, PCR scrap recycled after consumption, and imported aluminum scrap. Data shows that in 2024, PCR scrap accounted for 39% of China’s aluminum scrap supply and is expected to continue to be the main supply source in the future.
Severely impacted by the COVID-19 pandemic in 2020, the operating rates of various industries declined from 2018 to 2020, leading to a significant reduction in the supply of domestic and imported aluminum scrap in China. However, with the gradual economic recovery after the pandemic, it is expected that the supply of domestic and imported aluminum scrap in China will increase significantly, surpassing pre-pandemic levels.
With the increase in the amount of social waste in China and the continuous improvement of the recycling system, PCR scrap will become a key source of aluminum scrap supply.
Secondary Copper
Global Copper Scrap Market
SMM forecasts that the global copper scrap market size will grow at a CAGR of 4.2% from 2024 to 2030.
Global Copper Scrap Usage as a Percentage Share of Total Demand
Copper utilization methods are mainly divided into two categories: direct utilization and indirect utilization. Direct utilization refers to the use of high-quality copper scrap materials by semi-finished product processing enterprises to directly produce copper semis. Indirect utilization, on the other hand, involves the reprocessing of relatively low-quality materials through smelting and refining.
According to the data in the above chart, the market share of copper produced from scrap typically remains stable at around 36%. However, when copper prices rise sharply, the proportion of scrap increases accordingly. For example, in 2007, 2011, and 2012, London copper prices surged, and the proportion of scrap approached or slightly exceeded 40%. Until 2009/2010, the proportion of scrap consumed by smelters remained stable at around 6%, then rose to over 7%, and maintained this level until 2014. From 2015 to 2018, influenced by the rapid growth in mine supply, the proportion of scrap consumed by smelters fell below 7%. However, from 2020 onwards, this proportion rebounded to around 8%.
The use of refinery-grade scrap has long remained at around 5-6% of total consumption, but in recent years, this proportion has decreased to 3-4%. After reaching a peak of 28% in direct scrap usage in 2006 and 2007, its usage began to decline, primarily due to reduced application of scrap in areas such as water pipe production. Chinese wire rod producers now use more imported equipment and primarily adopt copper cathode as raw material, which has also led to a decrease in the proportion of scrap in total demand. The market share of direct scrap usage is now more stable, accounting for approximately 20-21% of the total, although it dropped to 19% during the 2020 pandemic. With the increasing demand for copper foil in EV batteries, the market share of high-grade wire rod scrap has gradually risen. Additionally, some manufacturers, particularly brass mills, have begun to invest in “closed-loop” recycling systems. These systems purchase, process, and upgrade scrap for direct use, thereby substituting more expensive copper cathode.
Although smelters and refineries absorb a significant amount of scrap, the remaining portion provides cost-competitive raw materials for wire rod mills, brass mills, and foundries. As the volume of scrap increases, its cost advantages will gradually be absorbed by manufacturers to replace copper cathode, blend in the manufacture of refined metals, or produce semi-finished products requiring 100% scrap feedstock, depending on end-use market demand. In 2023, direct scrap usage accounted for 20% of total consumption, while smelters and refineries consumed 9% and 4% of scrap, respectively. It is expected that in the future, direct scrap usage will continue to meet 20% to 30% of global demand, and the overall contribution of scrap to total consumption will rise from 33% in 2022 to nearly 43% by 2040.
Previous data indicates that in 2023, China accounted for as high as 37% of global copper scrap imports, while Germany accounted for around 9%. In terms of exports, the US accounted for around 18% of copper scrap exports, and Japan accounted for around 10%.
China’s copper scrap comes from PIR scrap, PCR scrap, and imports. In 2023, PCR accounted for 43% of China’s copper scrap supply and will remain a major source of supply in the future.
Most PIR copper scrap comes from downstream manufacturing processes, accounting for 76%. The power industry generates the most PIR scrap.
PIR scrap mainly originates from the production process of copper products. Among them, copper scrap generated by downstream manufacturers accounts for as much as 76%. The power industry is the sector that generates the most PIR scrap, primarily due to its significant demand for copper and high losses. During the semi-finished product processing stage, copper foil production has become the largest supplier of PIR scrap due to its high losses and high exports.
From 2023 to 2035, PCR copper scrap is expected to grow rapidly at a compound annual growth rate of 8%. The power, transportation, and durable consumer goods industries are the main factors driving the increase in PCR scrap. .
With the introduction of policies and requirements, the domestic scrap recycling system will continue to improve. Supervision over various recycling entities is also being continuously strengthened. Establishing a standardized and well-equipped copper scrap recycling system will become a future priority.
With the implementation of the “dual carbon” policy and the continuous growth of domestic copper scrap supply, the production of secondary copper products by smelters will continue to increase, thereby significantly boosting the demand for copper scrap.
Currently, the demand for copper scrap is mainly concentrated in the semi-finished product processing sector, accounting for as much as 65%, while the demand from smelters is only 35%. In the future, domestic demand for copper scrap will continue to rise, and the growth rate of demand for copper scrap from smelters will accelerate significantly.
From 2010 to 2020, the proportion of copper scrap used by smelters declined year by year due to the rising cost of using copper scrap. Since 2017, China’s imports of low-grade copper scrap have decreased significantly, resulting in a reduction in the amount of copper scrap used by smelters.
Driven by the increase in domestic copper scrap production and policies such as carbon neutrality, it is expected that the proportion of copper scrap used in the copper smelting process will gradually increase.
SMM Consulting Services
Taking A356.2 as an example, this section analyzes the cost structure of high-carbon aluminum/low-carbon aluminum/secondary aluminum (based on the 2023 price of electrolytic aluminum).
SMM Wheel Hub Cost Analysis
Currently, major wheel hub manufacturers primarily use A356.2 aluminum alloy as the raw material for producing automobile wheel hubs, with aluminum alloy raw materials accounting for 65% of the total cost.
Low-carbon aluminum has a higher price. In 2023, the average annual price of SMM low-carbon aluminum was 559 yuan/mt higher than that of SMM A00 aluminum ingot. The current technological level allows for a maximum addition ratio of 75% aluminum scrap. If enterprises need to reduce carbon emissions, they will need to use low-carbon aluminum in combination.
Structural Analysis of Aluminum Use and Carbon Emissions
Current Status of Aluminum Use in the Automotive Industry: To achieve the goal of reducing carbon emissions, automotive manufacturers require upstream aluminum alloy producers to use low-carbon aluminum and secondary aluminum as raw materials. In 2023, the proportion of secondary aluminum used in the industry was only 20%, while low-carbon aluminum accounted for only 10%. Most enterprises still primarily use high-carbon aluminum as raw material, accounting for 70%.
Analysis of Aluminum Costs
According to the current industry average (Company C), the cost of aluminum as a raw material is 14,915 yuan per mt. If the optimal solution is achieved in the future, the aluminum cost can be further reduced by 568 yuan per mt, reaching 14,347 yuan per mt.
Optimal Solution
Future Development Prospects: With technological advancements, the proportion of added secondary aluminum will gradually increase, reaching up to 80%, with the remaining 20% supplemented by low-carbon aluminum. At this ratio, carbon emissions and costs will achieve an optimal configuration.
