Aluminum recycling market poised for action

On the non-ferrous side of the recycled metals industry, Aluminum Dynamics (ADI) remains a major topic of conversation among market participants.

As I’ve mentioned in past articles, ADI is moving into the market faster than anyone expected, particularly in the Used Beverage Cans (UBC) sector. Their entry could come as early as this September, right in time for contract season. Many in the industry are holding off on pricing decisions until ADI sets the pace. Some players have already started purchasing UBC to prepare for ADI’s arrival.

That said, there’s been some skepticism from market participants about ADI’s timeline, especially when it comes to their goal of being fully operational by Q1 of 2025. There are concerns about whether they’ll meet their targets, with worries about potential unit qualification issues.

Some feel ADI may be too optimistic about their start date, which has caused some early 2025 pricing to be a bit uncertain. It shouldn’t come as any surprise that ADI is already making purchases in anticipation of Mexico starting up its slab production. This is a clear signal that ADI is preparing to come online, and all eyes are on how this will unfold as the market adjusts.

How this impacts the auto industry

For the auto industry, these developments in the aluminum recycled metals market are critical. With ADI potentially coming online in Q1 2025, it could help meet the growing demand for aluminum in vehicle production.

Automakers rely heavily on aluminum to make their cars lighter and more fuel-efficient, and ADI’s supply could be a key factor in keeping costs stable. If ADI hits their Q1 2025 timeline, we could see more supply coming into the market at just the right time.

However, if they face delays due to the qualification concerns that have been raised, it could tighten supply even further, putting more pressure on automakers. That said ADI’s owner, Fort Wayne, Indiana-based Steel Dynamics Inc., has a solid track record of being on point with their start dates. It’s likely that ADI will begin with the less technically challenging products before moving into more complex automotive applications.

Right now, it’s essential for the auto industry to keep a close eye on how ADI’s entry into the market plays out and adjust sourcing strategies accordingly. Whether ADI meets their targets or not, the aluminum market is shifting, and automakers will need to stay prepared.

Market outlook and ReMA Roundtable awareness

As we approach the upcoming roundtable hosted by Recycled Materials Association (ReMA) this month, these market movements should be on everyone’s radar. It’s shaping up to be a seller’s market, with sellers comfortable holding off, as spreads may move in their favor.

There is also anticipation, if it’s not already happening quietly, that OMNI will be entering the market sooner rather than later. Buyers would do well to get ahead of the game, as UBC is likely to get even pricier. With some thinking north of 80%.

Bulk deals are another factor to watch. A few large participants have been said to already lock in their bulk deals, but others are still skeptical. Reports suggest at least four major players are involved, but some mid-level manufacturers might not be aware of this, as it could have a big impact on their strategies.