Chinese Said Still Buying German Aluminum Scrap

Chinese importers are aggressively purchasing more German aluminum scrap despite the euro's recent rise, which some German refiners hoped would discourage exports, industry executives said.

Chinese importers have been buying European scrap, especially in Germany, to supply their rapidly expanding metals production.

This has helped push up prices and substantially reduce volumes available to Germany's large secondary aluminum industry, which produces metal from scrap not ore.

Earlier hopes the euro's rise in value would reduce Chinese buying have not been confirmed.

"We can see no improvement in scrap availability and the market remains tight," said Erich Oetinger, joint chairman of the German aluminum recycling industry association VAR.

"Exports continue from Germany and elsewhere in Europe to China. I cannot see any improvement in scrap supplies because of the strengthening of the euro."

Chinese industry can afford to pay more for scrap because it has lower costs for environmental protection and receives tax breaks for scrap imports, said Oetinger, who is also CEO of leading German secondary aluminum producer Aluminiumschmelzwerk Oetinger.

"Aluminum scrap prices remain very firm and have an upwards tendency, I cannot see any change to this," he said.

Scrap traders said German spot casting grade scrap, used to make commercial grade ingot, is currently at about 1,150 euros a metric ton, up by between 20 to 30 euros a metric ton since the beginning of this year.

"The economic position of secondary smelters has worsened," said Oetinger. "Prices for our raw material are rising faster than ingot prices."

"Although LME prices have risen recently this has mainly involved copper while aluminum still has a lot of catching up to do."

Other German secondary aluminum producers also said they could see no improvement in scrap supplies. "It is a tough job to buy enough at a reasonable price because of the Chinese," one said. "They are still taking anything they can get."

Another commented: "I did see a slight improvement at the beginning of the year but this appeared to be seasonal and they are back to their normal buying." Hans Muenster, managing director of the association of German metals traders VDM, said: "We fear that some secondary metals producers will go out of business if the trend continues."