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United States

There has been a release of multiple economic measures recently, few of which bode well for the expected reduction in the Federal Funds Rate. In late April, GDP readings for the first quarter showed disappointing growth of 1.6% and an unexpected increase in inflation. In addition, job growth is slowing, with the unemployment rate sitting just below 4%. 

These mixed numbers have some economists changing their thoughts on whether we will see Federal Funds Rate decreases in 2024. The varied economic data are causing more volatility in the US stock markets, which had been doing well in the first quarter. 

The last couple of weeks have also seen plenty of movement regarding trade restrictions on Russian metal in the Western World. The USA and UK imposed additional restrictions on Russian metal importation and its entry into the LME system, where it currently makes up more than 90% of aluminium inventories. This caused a spike in pricing, which pushed LME aluminium above its very tight range.

The US government and trade industry groups have also been concerned about Russian and Chinese metal making its way into North American-produced products through USMCA (United States-Mexico-Canada Agreement) partners. Some very unusual trade flows out of USMCA partners into the USA have particularly concerned government officials and trade representatives. To this end, Mexico recently imposed large import duties on some steel and aluminium products which should prevent some of the Russian and Chinese metal from entering Mexico. 

Lastly, the US government has announced significant investments through the Inflation Reduction Act in carbon-intensive industries, which will benefit domestic aluminium and steel producers. Part of the funding will allow for the first greenfield aluminium smelter to be built in the USA in more than 40 years. The wave of manufacturing onshoring continues unabated in the USA. 

In the US metals markets, there has been a substantial tightening of available recycled content metal. As the terminal markets have risen, it is unusual to find that metal has been less available. At a recent industry event, metal availability was a concern for both consumers and suppliers. In a market that is very tight, two of the new larger aluminium mills are within a year of opening. This supply gap is likely to be made up with sortation technology improvements allowing for mill usage of shred that is going into secondary end markets. 

There is still some discussion around the recycling rate for used beverage cans (UBCs), as more than 50% of cans available for remelting are still landfilled. UBC recycling rate increases would be a large help in filling this scrap gap.