China Aluminium Processing Summit 2020: Substitution of recycled aluminium for primary metal is constant in long term

SHANGHAI, Jun 11 (SMM) – The substitution of recycled aluminium for primary metal is “constant in the long term”, given the advantages of recycling in costs and environmentally-friendliness, said Racket Hu, vice president of SMM.

Speaking at the 15th China International Aluminium Processing Industry Summit in Yantai, Shandong province on June 11, Hu expects China’s demand for aluminium scrap to recover in the next decade after taking a hit from the government’s policy changes to imports and the COVID-19 pandemic.

Hu’s prediction came as Chinese aluminium users trim usage of aluminium scrap and switch to primary metal, due to shortages of scrap and sharply lower aluminium prices on the back of coronavirus lockdown restrictions ex-China put in place in late March.

Secondary aluminium casting plants increased their usage of primary aluminium to a ratio of 20% from the previous 2%, boosting consumption of primary aluminium by about 22,000 mt per week. Plants stopped doing so in late April, as external demand losses caused by the pandemic and slow domestic demand recovery pulled prices of secondary alloy ADC12 lower, narrowing the premiums over A00 aluminium to levels that are too low to support such a high consumption of primary metal.

In the extrusion sector, aluminium scrap was replaced by primary metal in the production of billets in April due to scrap supply shortfalls. That, coupled with higher processing fees and a significant improvement in the demand for construction extrusions, bolstered consumption of primary aluminium in billet by 200,000 mt for the month and by nearly 50,000 per week.

Hu expects alloy casting plants to remain the major consumer of aluminium scrap in 2021-2030, but its proportion will fall as scrap is gaining popularity in the production of billets and as producers of sheets/plates and even wire/cables and foil will also try to use scrap following technical advances.

Recycled aluminium accounted for 15% of China’s total aluminium consumption in 2019

While China has become the world’s largest producer of recycled aluminium, its recycling industry has yet to achieve dominance over consumption. In 2019, recycled aluminium accounted for about 15% of China’s total aluminium consumption, much lower than the ratios of more than 70% in the US and Japan.

Energy consumption of secondary aluminium is just 5% of that of primary metal

Production of secondary aluminium consumes 3-5% of the energy needed to produce primary metal, which means that the emission of carbon dioxide will be reduced by 0.8 mt and the usage of water will be cut by more than 10t for producing one mt of secondary aluminium.

The production of secondary aluminium also generate fewer solid and liquid wastes and slags.