CRU Aluminum: Scrap Flows Remain Global Issue as Market Prepares for 2024

Written by Matthew Abrams

The LME aluminum three-month price was unchanged on the morning of Nov. 3 and was seen trading at $2,235 per tonne. Meanwhile, SHFE cash was also broadly stable to end the week ended Nov. 3. The cash contract settled at RMB19,230 per metric ton (t) and was trading at RMB19,250/t on Friday.

The smelters in Yunnan province plan to do curtailments from Nov. 1 due to the power shortage in the coming dry season. The four aluminum companies in Yunnan province are expected to cut 1.16 million metric tons per year aluminum smelting capacity in total. Normally, the rainy season begins in May. The closed capacities are expected to remain closed until the beginning of the rainy season.

Indian Aluminum Association Seeks an Increase in Scrap Import Duty

The Aluminum Association of India (AAI) is supporting a duty increase for aluminum scrap imports to 10% as it believes India has emerged as “the world’s largest dumping ground for such scrap,” local media reports. The current customs duty on aluminum scrap is 2.5%.

“Given that foreign scrap is not governed by quality standards, it presents significant safety and environmental risks. In response, AAI has sought a duty of 10% on scrap imports, as a strong deterrent against dumping,” the AAI said in its representation to the government. The association also says that the Remission of Duties or Taxes on Export Product (RoDTEP) scheme, developed to encourage high-quality exports from India, could be a game-changer in stimulating domestic aluminum production. Meanwhile, the AAI is keen to cut customs duties to 2.5% on crucial materials in order to boost the industry’s cost competitiveness.

According to S&P Global, India imported 1.7 million metric tons (Mt) of aluminum scrap (7602) in 2022, up 6.3% year over year (YoY) and year-to-date (YTD) imports through to August 2023 are now at 1.18 Mt, up 4.6% vs. the same period last year. The US emerged as the biggest exporter of scrap to India, with 316,424 t in the YTD period through to August, well ahead of the UK with 110,577 t.

Kazakhstan Extends Scrap Export Ban

The government of Kazakhstan has announced it will prolong prohibition of foreign shipments of ferrous and non-ferrous scrap metals for six months from Nov. 7. First introduced in Q2 two years ago, the measure is intended to alleviate a domestic shortage of feedstock material and combat illegal circulation of scrap metal. The restrictions apply to most ferrous metals plus scrap copper, aluminum, lead, and spent lead batteries. However, the ban will not apply to shipments to Russia, the main buyer of Kazakh scrap metal, because both countries are members of the Eurasian Economic Union (EEU), Metal Daily News of Ukraine reported. January-August scrap metal exports this year amounted to 25,000 t, down from 125,000 t from the corresponding period of 2021 and 1 Mt in 2019.

China Imports More Aluminum Scrap

In the first nine months of this year, China imported 1.27 million tons of aluminum scrap, showing a year-on-year growth of 14%. Among these imports, China received 230,000 tons from the EU, 194,000 tons from Malaysia, 156,000 tons from Japan, 144,000 tons from Thailand, 133,000 tons from the USA, and 126,000 tons from the UK.

Chinese scrap imports have been impacted by new policies introduced in 2020, which required the importation of high-grade scrap with aluminum content of 91% and above. As a result, aluminum scrap imports declined to 825,000 tons in 2020 from 2.5 million tons in 2013. However, aluminum scrap imports have rebounded, increasing by 47% year on year to 1.5 million tons in 2022, and reaching 1.3 million tons in the first nine months of 2023. A significant volume of investment in scrap processing plants in Southeast Asia, including Malaysia and Thailand, has contributed to this growth. These plants can process scrap to meet China’s import standards, and market participants are now more familiar with scrap import procedures. China’s strong demand for scrap, driven by domestic supply constraints, continues to support imports for its fast-growing secondary aluminum market.

Prysmian and Rio Tinto Partner on Sustainable Supply of Materials

Leading cable producer Prysmian Group and Rio Tinto are partnering to build a more sustainable North American supply chain for materials needed to expand power grids for the energy transition. Power generation from renewables in the US is expected to increase from 21% in 2021 to 44% in 2050, the online statement says. This requires significant investments in power grids and boosting demand for innovative materials used in electrification projects. To help satisfy this increased demand, Rio Tinto and Prysmian have signed a five-year supply agreement for low-carbon aluminum made with renewable hydropower from Rio Tinto’s Canadian operations. This agreement will support Prysmian’s decarbonization drive towards achieving its objective to be carbon neutral by 2050.

The post CRU Aluminum: Scrap Flows Remain Global Issue as Market Prepares for 2024 appeared first on Steel Market Update.

Latest in Market