Aluminium recyclers in the U.S. have experienced a business boom on account of the trade war between China and the U.S. According to Harbor Aluminum Intelligence, recycled aluminium accounted for the largest share of the aluminium consumed in the U.S. in 2018.

“There’s a huge win for domestic recyclers and producers,” said Luke Palen, president of Spectro Alloys Corp., a Minnesota company, which recycles aluminium scraps into automotive aluminium alloys.

Harbor says imports of aluminium dropped about 20% in 2018 due to the tariffs. While domestic production rose 20%. But domestic primary smelters supplied just a fraction of the aluminium consumed despite higher production last year. Most of the domestic production that offset lower imports came from the aluminium recyclers.

China imposed strict quality norms for scrap imports and imposed retaliatory tariffs totalling 50% on U.S. aluminium scrap, creating an oversupply for U.S. recyclers to remelt into new aluminium. U.S. scrap exports to China continued falling. The U.S. generates the largest volume of aluminium scrap from old automobiles, demolished buildings and factory waste. The U.S. scrap industry had been dumped with a burgeoning supply of junked cars even before the tariff war started. After the tariffs were imposed by China, prices for automotive aluminium scrap in the U.S. fell by more than 20% from a peak in early 2018 due to oversupply. The scrap-metal glut could grow further in 2019 as China is going to make its scrap import rules stricter. The trade talks between the U.S. and China have not yet yielded any concrete results.

However, the flip side of aluminium scrap oversupply is that companies that buy and sell scrap aluminium but don’t process it into new metal are hurt by the low scrap prices. Schnitzer Steel Industries Inc. last week reported a 35% decline in profit from its business that sells mixed-metals scrap recovered from shredded cars. Scrap processors are doing good business and are planning further expansions.