AMU: Is it time for a rethink on secondary aluminum casthouses?

This project has been executed on time and on budget, which in today’s environment is no easy task. If you are lucky enough to score a coveted invite to their grand opening on Oct. 2, you will get to see this first-class operation in action.

What happened to the other projects?

All of which begs the question: what happened to all the other secondary projects that we have heard about over the past two years? The MX/Century 120,000 metric tons per year (t/yr) secondary billet plant in Leetonia, Ohio, has been on hold for some time, as the partners wanted to see how economic conditions would play out. That looked to be a smart decision in 2025 as billet premiums were low, and demand has been mixed so far.

The Adaptiq secondary billet plant, earmarked for Cincinnati, has been quiet for some time, with some questions about whether the financing has been secured yet. Again, postponing that project may have been the right move.

Within the sheet ingot sector of the market, the Metal-X project planned for Defiance, Ohio, has been stalled, pending improvements in trading conditions of the rolled product market. ADI has put its San Luis Potosí, Mexico, secondary sheet ingot casthouse into production, but its twin facility in Gila Bend, Ariz., ran into regulatory issues with its original site, prompting the process of building at a new adjacent location in Benson, Ariz.

Aside from the above projects, there has really been no substantial capital allocated to secondary casthouses of late. However, that may change, given the price action in value-added products and scrap costs.

Premiums are poised to rally and scrap inputs are attractive

Conditions for investing in secondary capacity are rapidly improving:

• Prices for value-added products are on the cusp of going up for 2026. We expect primary producers to seek to boost billet upcharges to as high as 20 cents per pound (¢/lb) above the Midwest transaction price (MWTP). Foundry alloy upcharges are also poised to rise 5-7¢/lb. Sheet ingot upcharges may be most restrained but could still see increases of 3-5¢/lb, to cover the 50% tariff on the upcharges.
• Scrap differentials expressed to Midwest have widened sharply, some representative differentials:
  • Used beverage containers at 92¢/lb discount to P1020 or a 50% buying of MWTP
  • 3003 bare segregated alloy at 40¢/lb discount to MWTP
  • 6063 new bare extrusions at 31¢/lb discount to MWTP

The differential between value-added prices and scrap replacement is making the economics work for new secondary investment.

Here is a simple example: purchasing 6063 bare extrusions at 31¢/lb discount to the MWTP and selling secondary billet at 18-20¢/lb discount to the MWTP creates a gross margin of 49-51¢/lb.

Even if we allow for a generous deduction of melt loss, higher labor costs in this environment, and freight costs for inbound and outbound product…there is still serious money to be made.

Another validation of this is the pending toll conversion fees that existing secondary billet producers will be charging for 2026. Whereas 2025 saw tolling fees in a range of 19-22¢/lb, we expect to see Hydro, Matalco, and Nanshan looking for tolling charges of over 40¢/lb.

Investment in secondaries should be back in play in 2026

A tip of the cap to EGA/Spectro, the timing of their arrival in the secondary market could not have been better. Yes, there are formidable incumbents to compete against them for new secondary business, but the conversion fees should be generous. We would not be shocked to see EGA/Spectro quietly plan for a phase two expansion of Rosemount very soon.

Hydro may also be dusting off plans for Cassopolis 2, which might result in a doubling of that plant’s capacity from 120,000 t/yr to 240,000 t/yr.

We further expect that Century/MX will greenlight getting Leetonia moving in 2026. Adaptiq should also find the financing markets considerably more receptive when they show them the math above.

Will non-casting extruders get in on the act?

Western Extrusions (2021) and Service Center Metals (2023) were the last 2 extruders to build greenfield secondary billet casthouses. 2024 saw generally high billet upcharges, but extruders elected not to invest. 2025 saw sharply lower billet upcharges, which only reinforced the decision by non-casting extruders NOT to get into the re-melt business.

However, 2026 may prompt some progressive extruders to reconsider their decision to backwardly integrate.

Why This Matters

Buyers of value-added products are not going to be happy with the offers they start to see this fall as the “mating season” kicks off. By then, it will be too late for anyone to respond to rising prices through new secondary investment earmarked for 2026.

Any decision taken in late 2025 or early 2026 would not bring new capacity online until early 2027. Still, the combination of expensive value-added products and cheap scrap creates a strong incentive for companies to move now.