Recycled Aluminium News - General

Outlook 2017: Can a rising automotive industry demand break the lull in secondary aluminium market?

AL Circle

2016 has not been a truly encouraging year for scrap aluminium market. Although awareness about aluminium recycling grew manifold among the value chain players, and international bodies made it a point that the smelters, re-melters, and end use product manufacturers complied with the sustainability targets set for 2020, actual scrap aluminium trade met with strong headwinds due to downsizing and closure of operations. China was also seen buying less of the metal scrap from the international exporters as it aggressively sought to boost its internal collection network. So, what is there in store for recycled aluminium in 2017? - Let’s try to have a sneak peek.

{alcircleadd}

Aluminium scrap trade to resume pace but uncertainty remains:

At last year’s ISRI Commodities Roundtable, held in Chicago from September 19-21, Matt Kripke, president of Toledo, Ohio-based Kripke Enterprises and moderator of the aluminium panel, had highlighted the significant decline in aluminium scrap activity, especially on the export market, over the past several years. Following his remarks, Fred Penha of CME Group had discussed steps that scrap metal recyclers could take to lessen their exposure to the volatility in the aluminium markets.

Mike Southwood, another senior consultant with CRU Group, pointed out how Alcoa split, Brexit, acquisition of Aleris by a large Chinese aluminium producer, the rapid growth of the Chinese aluminium industry and the use of aluminium in the automotive sector had impacted aluminium scrap trade globally. Southwood forecasted, following Alcoa's split when Arconic starts buying material on the open market, down the line, it would have a significant impact on aluminium scrap markets. Since, Arconic has already started signing contracts it can be expected to create some traction in the scrap aluminium market in 2017.

News
In China, post-consumer aluminium scrap consumption has increased rapidly over the last three years. But the Asian country is aiming at achieving self-reliance as far as recycled metal sourcing is concerned. So, it has stepped its scrap generation and collection activities accordingly. Chinese scrap supply has almost doubled between 2008 and 2015. According to industry sources, the country has increased its secondary scrap aluminium collection from 2.1 million metric tons in 2008 to 4.3 million metric tons in 2014. This trend is expected to continue in 2017, which means less aluminium scrap will be flowing in to China from the global market.

Looking at the aluminium price dependent supply side, if primary aluminium price fails to hold its grounds (which is a possibility after Donald Trump assumes assume his office and dollar gains in strength) a percentage of end user industry players will till more towards it rather than opting for aluminium scrap. But, then, crude oil output cut has already been agreed on by the APAC countries.  Prices of oil are firming up. So, it is likely that primary aluminium will become costlier. In that case, things will be rosier for scrap dealers. However, which way the market moves in the long term- is for the traders to watch out for and analyse.

Larry Snyder with United Scrap, a scrap metal recycler based in Cicero, Illinois, called for scrap dealers to be cautious with their trading activities. Putting up a caveat Synder said, “My philosophy is if you have more than a load of scrap you have too much. I am not looking for a home run or to get killed. Don’t speculate. As a scrap dealer use caution. Turn your inventory over.”

News
Analysts were not all pessimistic on recycled aluminium outlook till 2016 end. On a more positive note for the scrap aluminium market, one analyst said that the inevitable decline in ferrous prices through the end of 2016 would reduce the supply of aluminium in the market. The reason is that with lower ferrous prices auto shredders will not be running as much, which means less zorba will be generated and there will be less aluminium scrap on the market which will buoy up its prices in major markets.

At the same time, inclement weather in the East and Midwest toward the end of the year may mean some shortages of aluminium scrap throughout a good chunk of the market until the spring. If this happens, there may be an uptick in demand for secondary aluminium.

{googleAdsense}

Automakers to bank more on recycled aluminium:

Auto industry remains the key demand generator for recycled aluminium.  The industry has been increasing its use of aluminium to build lighter cars that emit less carbon dioxide. The auto press shops that supply the aluminium alloys to the automakers stamp different sheet components, which require the separation of production scrap, making recycling more complicated.

Ford which is already recycling as much as 20 million pounds of aluminium stamping scrap per month for its F-150 pick-up trucks, at its Dearborn Truck Plant, plans to use more of the light metal in its future cars.

News
Volvo saved 300 tonnes of aluminium through its remanufacturing activities in 2015. The company is working towards boosting the amount of recycled materials (non-metallic as well as metallic parts made of steel or aluminium) in its cars and reducing the quantity of virgin materials.

Norsk Hydro, in November last year, signed a cooperation agreement with the equipment company Austin AI Inc. to jointly develop and test an advanced technology to sort automotive aluminium alloys. In a news release about the project, the companies stated that new developments could bring a step change to efficient, robust recycling of manufacturing scrap and used cars.

An aluminium-recycling project has seen Jaguar Land Rover reclaim 55,000 tons of the lightweight metal it uses in building many of its products. The project marks a significant step towards JLR's goal of having up to 75% recycled aluminium content in their vehicle body structures by 2020. The structural grade of recycled aluminium has been tested and introduced in the lightweight bodies of all new Jaguar XF and F-PACE models.

Aluminium use in automotive bodies has already been gaining traction in the US and EU markets. Now, India too is taking baby steps towards making aluminium a part of its automobile industry value chain. Though cost (aluminium in raw form is costlier than steel) and technology remain key hurdles, the country's top industry bodies like The Aluminium Association of India (AAI) and Automotive Research Association of India (ARAI) have come forward to work in tandem with the Government of India on projects that aim to boost use of aluminium in automobile parts manufactured in India.

Packaging also remains a key demand generator:

In addition to automobiles, packaging and FMCG manufacturers are also expected to provide a decent traction for recycled aluminium. A number of partnerships were forged and aluminium recycling projects were started in 2016, which will start yielding results this year.  Gulf Aluminium Rolling Mills Company's (Garmco) $55 million worth aluminium remelt plant near its main production facilities in Bahrain, for instance, is expected to begin operations in the second half of 2017.

News
Renowned coffee brand Nestle's Nespresso is moving on fast track towards its sustainability goals with recycled capsules. The capsules are now collected in 36 countries, the company says, and they are getting a new look through their Second Life project. Nespresso has a target of achieving 100% sustainably managed aluminium by 2020, and Second Life is part of the overall strategy to close the loop so that all the aluminium used in the coffee capsules is considered an end-to-end resources.

Aluminium recycling is an important focus area for the entire aluminium industry value chain. So, given the positive demand outlook of the secondary metal, it is expected aluminium scrap trade will gain momentum globally as the year unfolds.

Save

Edited By:


This news is also available on our App 'AlCircle News' Android | iOS


Alternate Text
EPIQ Machinery

A world class equipment designer specialized in developing innovative & effective solutions for heavy equipment, vehicles, and material handling systems

Alternate Text
RIA Cast House Engineering

Leading supplier of rail mounted precision Furnace Charging Machines and Furnace Skimming Machines

Alternate Text
Altek

Leading manufacturer of value-added equipment for the aluminum casthouse

Alternate Text
Jagannath Company

Manufacturers & Supplier of Magnesium Metal and Aluminium Foundry Chemicals

Alternate Text
CETAG

A supplier of proven systems and an expert adviser in aluminum casthouse technology, offering its services worldwide to the aluminum industry.

Related
Business Leads
Interested to aluminium ubc scrap. Destination : Algeria
18-Mar-2024 Buying request

We are interested in purchasing large quantity of CLEAN Alum...
14-Mar-2024 Buying request

Interested to buy aluminium scrap on monthly basis Destinat...
31-Jul-2023 Buying request

Read this news article and much
more on the AL News app
Get real-time news and business
lead alerts on your phone
SUBSCRIBE NOW
Market

Market

Project

Project

Technology

Technology

Leads

Leads