12 JUNE 2012Steelguru.com
Novelis expands aluminum recycling in volatile market
Edited by : AL CIRCLE
2 min read
Reuters cited Mr Phil Martens CEO of Novelis Inc as saying that scrap dealers are reluctant to sell their used beverage cans due to a sharp slump in aluminum prices, giving the world’s largest flat rolled aluminum maker even more impetus to expand its own recycling capacity.
Mr Phil Martens said that Novelis is pushing ahead with plans to double the proportion of scrap it uses as raw material by 2020. It also plans to build its own processing facilities to protect itself from supply restrictions caused by fluctuations in the primary aluminum price on the London Metal Exchange.
He said that but the recent slump in aluminum prices to below USD 2,000 per tonne, a level considered critically low has made the issue all the more noticeable. Availability has been constrained as scrap yards hoping for a price rebound hold onto stock of the used beverage cans, referred to as UBC in the industry.
Mr Derek Prichett the company’s vice president of global recycling said that used beverage can prices are calculated as a percentage of the LME primary cash price. That percentage has been steady so far this year but the price is exposed to the wild gyrations on the LME which has been in a wide USD 800 range over the past year.
LME cash aluminum prices sank to below USD 1,950 per tonne in recent weeks on slowing growth in China and Europe’s escalating debt crisis but were as high as USD 2,785 per tonne a year ago. Novelis has been aggressively cutting costs in North America and Europe announcing the sale of three aluminum foil manufacturing plants in Europe earlier this year to American Industrial Acquisition Corporation Mr Martens expects the sale to close by the end of this month.
Mr Martens said that “As we looked at this year we felt that the LME aluminum price would not really have the dynamic trend upward in the short term, so we prepared ourselves for that. Additionally, Novelis has shut in some of its high cost production announcing the closure of its Saguenay Works facility in Jonquiere, Quebec in April.
He said that Saguenay was a prime based facility. We could not really use recycled material there but it also helped reduce infrastructure costs and the logistical costs that were associated with doing business there.
Mr Phil Martens said that Novelis is pushing ahead with plans to double the proportion of scrap it uses as raw material by 2020. It also plans to build its own processing facilities to protect itself from supply restrictions caused by fluctuations in the primary aluminum price on the London Metal Exchange.
He said that but the recent slump in aluminum prices to below USD 2,000 per tonne, a level considered critically low has made the issue all the more noticeable. Availability has been constrained as scrap yards hoping for a price rebound hold onto stock of the used beverage cans, referred to as UBC in the industry.
Mr Derek Prichett the company’s vice president of global recycling said that used beverage can prices are calculated as a percentage of the LME primary cash price. That percentage has been steady so far this year but the price is exposed to the wild gyrations on the LME which has been in a wide USD 800 range over the past year.
LME cash aluminum prices sank to below USD 1,950 per tonne in recent weeks on slowing growth in China and Europe’s escalating debt crisis but were as high as USD 2,785 per tonne a year ago. Novelis has been aggressively cutting costs in North America and Europe announcing the sale of three aluminum foil manufacturing plants in Europe earlier this year to American Industrial Acquisition Corporation Mr Martens expects the sale to close by the end of this month.
Mr Martens said that “As we looked at this year we felt that the LME aluminum price would not really have the dynamic trend upward in the short term, so we prepared ourselves for that. Additionally, Novelis has shut in some of its high cost production announcing the closure of its Saguenay Works facility in Jonquiere, Quebec in April.
He said that Saguenay was a prime based facility. We could not really use recycled material there but it also helped reduce infrastructure costs and the logistical costs that were associated with doing business there.
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