The recycled aluminium business is booming and worldwide demand for aluminium or its related products is increasing year by year with natural growth rates, mostly due to a surge in Asian demand, Scholz non-ferrous metals division head Mike Greulich said Tuesday.
Speaking at Metal Bulletin's 15th International Recycled Aluminium Conference in Munich, Greulich said China, in particular, was set to become the most important market for recycled aluminium alloy production.
Scholz, based in Germany, is a privately owned scrap collector, recycler and trader of ferrous and non-ferrous metals.
Greulich noted that China's recycled aluminium output was 1.6 million mt in 2004, and was targeting 4.5 million mt by 2010. He said the production growth in China was mainly based on structural benefits like the affordable work force there, more relaxed environmental legislation, monetary reserves and low energy costs. "But it could be hindered by the availability of energy at such growth rates," he said.
Greulich said the substantial growth seen in Europe was related to the strong and innovative European automobile industry as a technology driver and "a powerful foundry industry with a high human know-how to improve castings quality in short cycles." He said the increasing capacities in Europe were predominantly driven by the diversified German and Italian foundry industry. He added however that China had become the "world's factory" with major industrial conglomerates installing production units there.
Greulich said the Japanese and European aluminium industries had a very effective and flexible supply chain. He said the two regions had the competitive edge in small and big petrol engine technologies and were both leaders in fuel efficient engines.
Greulich noted that while China's aluminium industry would continue to have significant medium and long-term potential, he was surprised that India had not attracted more foreign investment -- particularly since in terms of population it "is by far the largest democracy in the world."
Aluminium scrap flow shifts to China
Greulich said that when talking about scrap flows it was important to talk about regions, the quality of scrap from the respective regions and the quality of the data. "The statistical quality in Europe, Japan and surprisingly China is authentic, in contrast to the US, India and CIS," he said. He said the US had a high level of old scrap arising from end-of-life products similar to the situation in Europe, Japan and CIS. "In all these regions we see both a high scrap potential and a powerful and diversified aluminium treatment and finishing industry."
He said China had a very fast growing aluminium processing and treatment industry and had both alumina and scrap deficits, resulting in scrap imports. Greulich said India looked like a "sleeping giant" and the country's aluminium processing and treatment sector large investments were on track. "Only recently privately owned Indian companies like Mittal, Hindalu and Tata have taken over well known European metal players like Arcelor, Novelis and Corus Steel," he said.
Greulich noted that over the last three years there had been an interesting shift of the aluminium scrap flow from the different regions to China and India, but noted that data on US shipments was poor, while those from Europe were fairly good. He said due to increasing dollar weakness, scrap exports from Europe were decreasing. He said the tendency toward an increase in export volumes to China generated in the US and CIS, supported the European recycling industry as alloy producers there were in balance in their demand and supply of aluminium scrap.
Greulich said there was an exponential increase of recycled aluminium from end-of-life products. He said in the ten years from 1995, the recycling rate had increased by 2 million mt and from now until 2020, a 2 million mt increase was expected every five years. "This forecast will stimulate both the international trading volume of aluminium scrap and the investment in
recycling facilities," he noted.
But, Greulich said this development was hindered by protective barriers, especially in China and the EU. "Unfortunately actual new and strength EU-legislations are tightening the international competition of the European aluminium recycling industry," he said, adding that in particular, REACH and the EU regulation on shipments of waste had a very negative impact on market flexibility and the cost structure of the industry.
He noted that the US, Europe and Japan as well as upcoming China were currently, and would continue to be, the centers of the aluminium alloy producing industry. But, he noted that if current data was correct, the US appeared to be loosing momentum: "In the past 10 years we have seen a 60% increase in Europe and a moderate increase in Japan. The production in the US has reduced by half."