“Strategic Surpluses” report outlines a bold policy strategy to reclaim major metal production capacity
Washington, D.C. — SAFE’s Center for Strategic Industrial Materials today released a new report, Strategic Surpluses: China’s Economic Warfare on Major Metals, warning that the Chinese Communist Party’s state-backed dominance of steel, aluminum, and copper production has distorted global markets, weakened U.S. industrial capacity, and created a growing national security vulnerability.
While public focus on US-China competition has centered on advanced technologies, semiconductors, and critical minerals, SAFE’s report argues that major metals remain an essential but underappreciated foundation of economic and military power.
“Steel, aluminum, and copper are not just commercial commodities. They are the building blocks of defense production, grid infrastructure, advanced manufacturing, artificial intelligence, and U.S. economic security,” said Joe Quinn, Executive Director of SAFE’s Center for Strategic Industrial Materials. “China understands this. The United States needs to act like it does, too.”
China’s Strategic Surpluses Are Reshaping Global Metals Markets
The report finds that the Chinese Communist Party’s state-directed industrial model has allowed Beijing to build dominant positions across major metals supply chains. Chinese producers refine more copper, manufacture more steel, and smelt more aluminum than any other country.
This production is supported by state planning, state-owned enterprises, below-market financing, energy subsidies, coordinated industrial policy, and other non-market tools. The result is a level of production capacity far beyond domestic demand, allowing China to export excess supply, influence global prices, and weaken the business case for Western producers.
In steel alone, China had 1,141 million metric tons of capacity in 2024, or 46 percent of global capacity. Chinese demand was only 909 million metric tons, leaving a surplus of 232 million metric tons, roughly double total U.S. capacity.
U.S. Industrial Capacity Has Eroded Across Steel, Aluminum, and Copper
The report documents a sharp decline in U.S. metals production capacity over the past several decades.
U.S. alumina production fell from 4.9 million metric tons in 2000 to less than 710,000 metric tons in 2024. The United States had 22 aluminum smelters in 1994, compared with only four operating today. In copper, U.S. smelting capacity has declined from 16 primary copper smelters in 1976 to two operational primary smelters today, while China operates 47 copper smelters and plans to add more.
This decline has consequences beyond market share. The report warns that the loss of domestic metals production also means the loss of skilled workers, manufacturing know-how, production flexibility, and defense surge capacity.
Major Metals Are Essential to Defense and Energy Security
The report emphasizes that steel, aluminum, and copper are indispensable to the U.S. defense industrial base. Steel is essential for warships, submarines, armored vehicles, infrastructure, and specialty alloys. Aluminum is critical for aerospace and advanced defense systems, including high-performance aircraft. Copper is essential for ammunition, power transmission, telecommunications, electronics, and the electrical grid.
In a conflict, demand for these materials would rise quickly. The report notes that in one recent war game, participants were instructed to plan for a fivefold increase in annual defense demand for aluminum alone.
Because Defense Production Act authorities apply most directly to domestic entities, the United States’ ability to mobilize during a crisis depends on having a viable domestic industrial base before the crisis begins.
SAFE Outlines Policy Roadmap
The report argues that tariffs are an important tool, but not a complete strategy. SAFE calls for a sustained, bipartisan policy agenda to rebuild a competitive and secure metals supply chain.
Recommendations include:
- Allocate federal funds to modernize steel, aluminum, and copper facilities.
- Ensure the electric grid is ready to support large new industrial loads.
- Accelerate recycling and treat high-quality metal scrap as a strategic asset.
- Invest in manufacturing innovation, advanced metallurgy, and energy efficiency.
- Create a Federal Consortium for Advanced Metals to coordinate federal policy.
- Improve Commerce Department supply chain visibility for steel, aluminum, copper, and scrap flows.
- Strengthen U.S. trade policy, including rules of origin, tariff enforcement, and tools to prevent dumped or subsidized metals from entering through finished products.
- Coordinate with trusted allies to respond to the Chinese Communist Party’s non-market practices.
- Fill workforce gaps through apprenticeships, technical training, and retention incentives.
“Restoring America’s major metals capacity will not happen through any single policy action,” Quinn continued. “It requires a coordinated industrial strategy that treats steel, aluminum, and copper as the strategic materials they are.”
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About SAFE
SAFE is an action-oriented, nonpartisan organization committed to transportation, energy, and supply chain policies that advance the economic and national security of the United States, its partners, and allies. Since 2004, SAFE has worked with its Energy Security Leadership Council, a peerless coalition of current and former Fortune 500 CEOs and retired four-star admirals and generals, to support secure, resilient, and responsible energy solutions. Learn more at SecureEnergy.org.[/vc_column_text][/vc_column][/vc_row]
