SMM Exclusive: China Aluminium Scrap Research

SHANGHAI, Aug 1 (SMM) – As China releases carbon neutrality and circular economy policies, energy saving and environmental protection have become China's primary focus in recent years. Compared with primary aluminium, secondary aluminium has evident advantages in environmental protection. Aluminium recycling and reuse is globally recognized as one of the most important ways to achieve carbon peak and carbon neutrality, and is the key to maintaining stable resources and balanced supply in the aluminium industry.

The aluminium scrap in China is mainly supplied by domestic aluminium scrap recycling, and the demand of aluminium scrap is mainly driven by the secondary aluminium products. In recent years, the supply and demand of aluminium scrap in China have shown an upward trend. Before 2019, China's aluminium scrap supply was smaller than demand, but after 2020, the situation has been reversed. China is expected to become a net exporter of aluminium scrap in the future.

According to SMM, China's aluminium scrap supply increased from 5.218 million mt to 7.398 million mt between 2015 and 2020, with a CAGR of nearly 6%. According to SMM Aluminium Scrap Supply Forecast Model, China's aluminium scrap supply will increase to 21.933 million mt by 2040, with a CAGR of about 5.3% from 2020 to 2040. China's aluminium scrap supply has been showing an upward trend mainly due to three major factors. The first is that China has been in a rapid development stage in recent years, there will be more and more aluminium products reaching the end of their service life in construction, transportation and other industries, which will stimulate future development of China's aluminium scrap recycling industry. The second is that in recent years, China has issued a number of policies to regulate and integrate the existing recycling channels of non-ferrous metal scraps, accelerate the standardization of non-ferrous metal scraps trading and centralized processing, and gradually form a complete domestic recycling system of secondary non-ferrous metals, which will greatly support the development of the secondary metal industry. The third is that the advantages of secondary aluminium production stand out with the efforts to put carbon neutrality policy into effect. Compared with the traditional aluminium production, secondary aluminium production is advantageous in energy saving and emission reduction, which in turn will vigorously promote the development of aluminium scrap recycling industry.

According to SMM, China's aluminium scrap demand rose from 6.2 million mt to 7.187 million mt between 2015 and 2020, with a CAGR of about 2.5%, and that is expected to increase to 22.302 million mt by 2040, with a CAGR of around 5.5% from 2020 to 2040. The demand for aluminium scrap in China has been on an upward trend mainly due to the rapid growth in the secondary aluminium production such as ADC12 and remelted billets. The first reason is that the ADC12 market is already very mature and the investment in the market is expected to increase constantly. The use of lighter cars will boost future development of the die-casting industry, thus the demand for aluminium scrap in ADC12 market will continuously increase in the future. The second reason is that remelted billets are mainly used in the construction and transportation industries, with their promising development prospects, capacity and production of remelted billets will increase significantly.