ISRI 2019 Convention threw light on the changing trends in the aluminium scrap recycling sector in the US

During the Spotlight on Aluminum session at ISRI 2019, the annual convention and exposition organized by the Institute of Scrap Recycling Industries (ISRI) at Washington, presenters predicted additional investment in secondary and primary aluminium production and discussed about the changing trends in the aluminium recycling sector.

“When we look at the European aluminum market and we look at the primary side, we’ve seen billet prices under pressure,” Steve Deacon, nonferrous president for EMR USA said. “We see closed loop supply chain management that has reduced the need for external scrap.

He said that demand for secondary aluminium from the automotive sector is slowing down in the US because of the closed loop recycling by automakers.  The secondary aluminium products are now flooding out to the Asian market.  Because of less scrap demand, there is an oversupply of scrap in the domestic market. The US scrap export to China has dropped significantly but that has been compensated by India and other emerging Asian markets.  He also projected growing investment in the primary as well as the secondary aluminium sector.   

Andrew McKee, president of the Chicago-based Materials Trading division of Schupan & Sons also agreed to this. However, both men acknowledged that government policy is playing a big role in supporting these investments.

McKee also said that the growing use of aluminium auto body sheet by automakers has generated tremendous amounts of aluminium scrap in the US. He added that since the tariffs have increased the prices of primary aluminium, they have increased the demand for scrap and secondary aluminium in the US market.

He threw the question whether the current buyer’s market was “the new normal” for the aluminium scrap sector until more casting and rolling capacity could be built.

Mayenknecht represented aluminium scrap consumer Nemak, which operates 38 manufacturing facilities in 16 countries producing aluminium components for the global automotive industry.

Mayenknecht said that the company consumes about 860,000 tonnes of aluminium annually. The company has a re-melting facility in Mexico with 400,000 tonnes of annual capacity, with primary alloys comprising 25% and secondary alloys accounting for 75% in it.  

Jason Schenker, president of Prestige Economics, Austin, Texas offered a macro look at the global and U.S. economies and the expected effect on the aluminium sector in his introductory remarks and concluded by showing how the purchasing managers’ indices (PMIs) for the U.S., China and the Eurozone impacted aluminium prices.