Pictured above, left to right: Matt Kripke of Kripke Enterprises, Jeff Henderson of the AEC, Salam al Sharif of Sharif Metals, Mike Southwood of CRU International and Harry Dillman of Pennex Aluminum.
Compared with copper or ferrous scrap, aluminum recently has had a reputation as a more stable commodity in terms of pricing. An analyst invited to speak at the Spotlight on Aluminum session at ISRI2017, the annual convention of the Washington-based Institute of Scrap Recycling Industries Inc. (ISRI), has predicted that aluminum looks likely to trade in its accustomed range throughout 2017 because of a push and pull between positive and negative factors.
Mike Southwood, who works in the Pittsburgh area for London-based CRU International Ltd, said there are a number of risks and factors that could cause aluminum pricing to rise or drop sharply. However, he said he sees $1,830 per metric ton as the average price for aluminum in 2017, within the range it has largely traded in the past three years (though toward the upper end of it).
Southwood said some forecasters had predicted higher prices based on China’s vow to stifle aluminum output later in 2017 as part of its anti-pollution efforts. More recently, he said, CRU has become more “bearish for the second half of 2017” because of its prediction that “environment-related cuts in China will be less than expected.”
That bearishness occurs even though aluminum is gaining ground in automotive sheet applications, and that CRU sees the demand outlook in North America for both rolled products and extrusions as “relatively positive.”
Scrap dealers in the United States experienced a rise in the value of the Midwest premium in the first quarter of 2017 to an average of 10 cents. He sees the Midwest premium drifting toward 10.5 cents by the end of 2017 and up to as much as 12 cents in 2018.
Southwood also noted that in the December 2016 and early 2017, the U.S. experienced its “first year-on-year gains of aluminum scrap exports to China since November 2013,” helping to provide some of the upward momentum for scrap prices.
In a more global presentation, Salam al Sharif, chairman of United Arab Emirates-based Sharif Metals, said the Middle East has been adding to its aluminum production capacity steadily in the past two decades as national economies invest their petro-dollars into other industries.
He noted that the seven Gulf Cooperation Council (GCC) nations now have more primary aluminum capacity than North America. The region’s aluminum scrap, said Sharif, is both consumed within the GCC region and exported to India, China and other nations.
Jeff Henderson of the Illinois-based Aluminum Extruders Council (AEC) said U.S.-based extruders have invested some $2 billion into their facilities since obtaining government action to halt what had been a “surge” of extrusions being shipped from China.
Henderson said the AEC will remain vigilant on the issue. “It’s clear that China plans to export its way out of this overcapacity situation,” he said of the nation’s reported excessive aluminum output in 2016 and 2017.
He said the situation will tie into China’s wider effort to attain World Trade Organization (WTO) market economy status. If China subsidizes aluminum output by state-owned enterprises, it will signal that the nation “has not executed the reforms that are necessary,” said Henderson. He added, “We’ll see a lot of sparks fly over this.”
Harry Dillman of Wellsville, Pennsylvania-based Pennex Aluminum, said his company is spreading the word to scrap dealers to beware of aluminum pipes that contain boron carbide alloys. In most melt shops, the alloying elements are unwanted contaminants that can ruin heats.
Dillman said the piping material has been traced back to a manufacturer in Ohio as its producer. An attendee of ISRI2017 said the pipes are used in nuclear industry applications.
ISRI2017 was in at the Ernest N. Morial Convention Center in New Orleans April 22-27, 2017.