Substitution of Primary Aluminium by Aluminium Scrap to be Slow Unless Consumption in Related Fields Offers a Boost

SHANGHAI, Nov 26 (SMM) - Recently, the market has begun to discuss the impact of aluminium scrap on primary aluminium consumption next year. However, the impact of aluminium scrap on primary aluminium will not be as significant as imagined. It also has many limitations. The main reason is that all aluminium scrap is alloyed products, and the cost of aluminium purification is high. So the recycled aluminium scrap can only be used in downstream processing.

In terms of aluminium rods and primary alloys, there is not large volume of aluminium scrap for use due to the high element composition requirements. Almost only primary aluminium or even low-iron, high-purity aluminium can be used for production. The recycled aluminium scrap can only be used in three sectors, including traditional secondary cast aluminium alloy, secondary aluminium rod, and aluminium plate/sheet, strip and foil. The current proportion is approximately 7.5:1.5:1.

The end user consumption of secondary aluminium is mainly related to auto parts. The relatively mature ADC12, A380 and other aluminium alloy ingot brands can be directly produced using 100% aluminium scrap for a long time. There is no advantage in the cost of primary aluminium. However, in terms of automobiles, traditional fuel-powered vehicles are slowly being replaced by new energy vehicles. New energy vehicles can only be produced with primary aluminium currently due to higher material performance requirements and stringent element requirements.

Regarding secondary remelting rods, most secondary aluminium rods are 6063 alloy. Almost all the secondary aluminium rods produced with 100% aluminium scrap are non-standard aluminium rods, which can only be used for the production of non-standard building materials. And their consumption is closely related to real estate. In addition to 6063 aluminium rods, a small amount of 6061 secondary aluminium rods are currently used in the production of secondary aluminium templates. The consumption is also closely related to the real estate industry.

1/8 series of aluminium scrap can be used as a direct substitute for A00 aluminium ingots due to its high aluminium content. The source is mainly aluminium cable scrap and 1 series regular plate/sheet and strip scrap, which account for only a small volume in the entire aluminium processing industry. And there is no potential for a big increase.

Therefore, aluminium scrap is unlikely to have a big impact on primary aluminium in the short term unless the consumption of fuel-powered vehicles and the real estate sector surges, the sorting capacity of the recycling link improves substantially, or the purification technology of aluminium scrap makes breakthroughs. The substitution of primary aluminium by aluminium scrap will still be a relatively slow process.