Canadian Scrap Market Update: Trade Tariffs and Price Volatility Dominate the Week

As we predicted earlier, the Canadian scrap market experienced significant fluctuations last week due to trade tariffs, supply chain disruptions, and fluctuating prices across key commodities such as ferrous scrap, copper, and aluminum. Here’s a breakdown of the major developments:  

1. Impact of U.S. Tariffs on Canadian Scrap Exports

The U.S. imposition of a 25% tariff on Canadian ferrous scrap and metallics has created uncertainty in the market. Canadian exporters rely heavily on U.S. buyers and are bracing for potential disruptions. While some shipments are still en route under fixed contracts, U.S. steel producers have begun reassessing their procurement strategies, with at least one major producer halting purchases from Canada for February.  

On the other hand, the United States of America still enjoys a trade surplus with Canada in manufactured goods, excluding energy, and warns that retaliatory measures could hurt U.S. border states.  

2. Ferrous Scrap Prices and Supply Constraints

The Canadian ferrous scrap market remains tight, with mills struggling to secure sufficient tonnage due to logistical slowdowns and seasonal weather conditions. Prices are expected to rise further, driven by strong domestic demand and limited supply. The Trend Indicator for February rose to 69.5, reflecting bullish sentiment among sellers and brokers.  

3. Copper Scrap Market Trends

Copper prices surged last week, nearing $5 per pound, driven by tariff uncertainty and increased domestic demand. The U.S. tariffs on Chinese goods have also influenced global copper dynamics, with Chinese smelters turning to scrap copper as an alternative to mined concentrate. This shift could further tighten global supply and elevate prices.  

In Canada, copper scrap grades such as #1 Bare Bright and #2 Copper Wire saw price fluctuations, with domestic demand remaining stable but export-heavy grades facing widening discounts due to global uncertainty.  

4. Aluminum Scrap and Tariff Implications  

Aluminum prices rose by 10% over the past month, supported by strong U.S. demand and the 25% tariffs on Canadian imports. Canada, which supplies 80% of U.S. primary aluminum, could face significant disruptions if trade tensions escalate. This has prompted Canadian recyclers to explore alternative markets and strategies to mitigate the impact.  

5. Scrap Vehicles and Catalytic Converters

The scrap vehicle market remained stable, with catalytic converter prices influenced by fluctuating precious metal values. Platinum and palladium prices saw declines, but recycling activities continued to grow, driven by stricter environmental regulations and automotive demand.  

The Canadian scrap market is at a crossroads, with tariffs and geopolitical tensions reshaping trade dynamics. While domestic demand remains robust, exporters face challenges navigating the new tariff landscape. Industry stakeholders are calling for policy clarity and exemptions to minimize disruptions.  

In the coming weeks, market participants will closely monitor U.S. trade policies and their impact on Canadian scrap flows. The focus will also remain on sustainability initiatives, as recycling is critical in meeting global supply chain demands.