Competitive atmosphere

Features - Scrap Metals Supplement

The world’s hunger for aluminum remains strong, but secondary producers are vying for profitability in a competitive arena.

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January 3, 2018
Brian Taylor
© Razvan Matei | Dreamstime

Vehicle manufacturers have shown an increasing wil-lingness to use aluminum in a wider variety of components, helping create an overall growth market for the light metal.

While aluminum producers appreciate the ongoing appetite, the sector’s growth also has attracted investors from around the world. The end result for many secondary aluminum furnace operators is an overabundance of competition, even in a growth sector.

The list and map of North American secondary aluminum producers include facilities in a range of sizes operated by companies as large as Alcoa or as small as a one-location family-owned scrap yard.

The list was last published in mid-2015. In the ensuing two-and-a-half years, the changes have not been enormous, but disruption could be on the way in form of a Chapter 11 bankruptcy filing by the company with the most facilities on the list.

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Court officials, attorneys, creditors and executives are in the midst of formulating a Chapter 11 reorganization plan for Real Alloy. The Cleveland-based firm was operating 15 scrap-fed aluminum melt shops in 14 cities (13 in the United States, one in Canada) at the time of its bankruptcy filing in November 2017.

Some of these plants have operated for decades under several different ownership groups. No certainty is attached to what a reorganization plan will include, but it seems doubtful that every Real Alloy plant will remain in operation when the company emerges from bankruptcy.

A name change on this year’s list involves the former Sapa Extrusions. In 2017, Norway-based Hydro—which had been a co-owner of Sapa along with the Norway-based Orkla Group—bought out its partner. Hydro now refers to those assets as its Extruded Solutions business area.

Another Scandinavian company, Sweden-based Gränges, has entered the North American market by purchasing two aluminum plants operated by the former Noranda.

Braidy Industries is building a new facility in eastern Kentucky that is scheduled to come online in 2020. Kentucky’s state government offered considerable incentives to attract the $1.3 billion, 370,000-ton-per-year facility, which reportedly included taking a 20 percent ownership stake in the plant.

A “thank you” is owed to Recycling Today readers who helped identify and verify the 100-plus facilities on our list. Changes to the secondary aluminum sector are certain to continue in 2018 and beyond. As well, doubtless other facilities that we did not uncover belong on this list. If you know of one, please contact me by email at btaylor@gie.net with that information.