US scrap receipts shrink

In 2023, the U.S. economic performance has exceeded expectations. The Bureau of Economic Analysis reports an estimated real GDP growth of 2.5% for 2023. Analyzing the markets that influence the utilization of recycled materials, housing construction throughout 2023 indicates a downturn in both permits and starts, registering 12% and 9.0% declines, respectively. Despite a recent downward trend in mortgage rates over the past few months, they persist at levels higher than those seen in the previous two years.

Latest feedback from secondary market sources suggests diverse trends in scrap availability and activity in January. Reports indicate that UBC and post-consumer scrap continue to be available, but there is a shortage of aluminum siding/3000 series scrap, impacting rolling mills in the U.S. Currently, the 6000-series scrap remains unaffected, but there is a potential future impact as rolling mills might shift to consuming 6xxx series scrap, affecting the extrusion scrap market. Anticipations include significant investments in scrap facilities in 2024, leading to increased scrap availability. Some scrap producers have observed that the scrap market has become more seasonal compared to previous years, contributing to changes in scrap availability. The market feedback also indicates that scrap for 3xxx series is getting tight.

The latest surveys reported by the Aluminum Association indicate a continued decline in scrap receipts in December. The year-end class scrap receipts, based on 12 months of reporting by the Aluminum Association, show a 14.6% decrease relative to 2022. While there was a 5.0% y/y increase, there was a m/m decrease of 12.1%. Scrap inventory also totalled 876.5 Mlbs, contracting by 17.3% from like-2022 total and 1.3% lower than the previous month.

In November, U.S. exports of scrap (HS code 7602) amounted to 160 kt, representing a 4.5% decrease m/m. YTD exports of scrap totalled 1.88 Mt, increasing 3% over the 1.81 Mt a year ago. India, Canada, Mexico, and various South-east Asian countries remained the main export destinations for U.S. scrap. During November, U.S. exports to Dominican Republic (217% m/m) and France (89% m/m) increased considerably while exports to some countries saw a decrease, including United Kingdom (-94%), Philippines (-76%), and Netherlands (-65%). Similar to last month, China remains indirectly strong on U.S. scrap demand. China is also trying new grades such as 5052 that was not being used there before. China’s appetite for scrap makes some of the U.S. scrap producers concerned.

The latest UBC prices that we have been hearing are 0.72-0.77 $/lb. 5052 Poly is sitting at $0.91 /lb while 5052 Bare is close to $1.0 /lb. The New Bare 6063 Extrusion varied between $1.01 /lb to $1.05 /lb. 6061 Extrusion is close to $0.90 /lb. Clean 356 price is around $1.0 /lb. New painted scrap price is $0.96 /lb. Latest Litho scrap is traded at $0.90 /lb. India is observed to be a strong buyer of Litho scrap.