ISRI2023: Panellists highlight potential impact on aluminium scrap trade between US and India

Panellists at the Institute of Scrap Recycling Industries (ISRI) 2023 Convention & Exposition (ISRI2023) Spotlight on Aluminium session discussed investments in the North American aluminium value chain and potential impacts on aluminium scrap trade between the United States and India.

"Unprecedented investment was occurring. And it's remarkable to see that the aluminum industry continues to evolve, change and grow as it continues its history. The market was precariously balanced as of mid-April. That's not good news. That's not bad news. It's just where we are at this point in time," said Steve Williamson, North America research manager for London-based CRU Group.

Steve Williamson also said that secondary aluminium demand peaked from 2020 until the summer of 2022. Due to limited supply, several customers overbought. As of the second quarter of this year, some were still battling with inventory surpluses due to strong inflationary headwinds" that are lowering aluminium demand.

Given that the last new aluminium rolling mill built in the United States was in 1985, it's remarkable that three significant investments—Novelis, Steel Dynamics (SDI), and Manna Capital Partners—have been announced in the United States that integrate recycling and remelt centres not as ancillary investments but with secondary metals at their heart. However, reality has set in and taken some of the bloom off those announcements.

The extra 2 million tonnes of rolling capacity slated to come online may cause scrap flow adjustments, since some scrap that was previously routed to the Midwest will be diverted to Texas and the Southeast because part of the new capacity is farther south and southwest than before. He also said that the increased capacity improvements might result in a 437,000-tonne surplus of used beverage cans (UBCs).

Given the predicted scarcity of UBC and the need to service more automotive clients, aluminium scrap users perceive a need to obtain more of the existing outmoded aluminium scrap. Sortera Alloys can help with it. The Indiana-based startup has created equipment that sorts twitch or adjusts shredded aluminium grades using X-ray fluorescence and artificial intelligence (AI).

Sortera Alloys' vice president of commercialization, Ben Pope, claims that these grades constitute the largest untapped aluminium pile in the world, with 10 billion pounds of these mixed aluminium compounds possibly manufactured yearly. He said that wrought aluminium accounts for 40 per cent of the scrap in these combined metals.

"As U.S.-based aluminum producers embrace scrap, India's regulators are making it more difficult to do so," said Dhawal Shah, managing director of Mumbai-based Metco Ventures LLC.

According to Shah, India has raised its imports of aluminium scrap from the United States substantially during the previous five years, from 250,000 tonnes in 201 to 19 to over half a million tonnes from April 2022 to January 2023. He noted that India's massive secondary aluminium sector had fueled that increase, adding that it produces 3.6 million passenger cars yearly, making it the world's fourth-largest vehicle maker. The increased manufacturing of electric vehicles in the nation will enhance the usage of aluminium in the automotive sector, while nonautomotive uses are also growing.

"Bureau of Indian Standards (BIS) for aluminum scrap is in draft stage currently, it is inevitable that it will be finalized within three and six months from mid-April. It could include some more tweaks noting that the Material Recycling Association of India is in discussion with the developers daily. By end of the day, we just want to make sure that it does not scuttle growth, it does not sort of short supply the industry needs to grow. I just hope, and we all kind of hope that you know, it does not take India backward," added Shah.