Europe Al alloy market finds relief in China demand

Data: 2019-10-17
Views: 243

European aluminium scrap prices have plunged in recent weeks on heavy oversupply and low demand, as China's caps on scrap imports push more volume into a European market where demand from the mainstay automotive industry has shown marked weakness this year.

But some relief for beleaguered scrap sellers could be set to emerge in the form of more Chinese import demand — not for the scrap units denied under government policy, but for the aluminium alloy ingots produced from those units.

'In China, the lack of scrap has led to a lack of alloy ingots,' one alloy producer said. 'We're now exporting to China at better prices and finding alternatives to the depressed European market.'

China has long been one of the world's biggest scrap metal buyers, importing 2.2mn t of aluminium scrap in 2017. But its environmental ministry began implementing stricter scrap regulations towards the end of that year, limiting imports first with impurity thresholds of 0.5pc and 1pc for ferrous and non-ferrous scrap, respectively, in an official notification to the World Trade Organisation in November 2017.

The country's aluminium scrap imports dropped sharply as a result, falling by 26.7pc on the year to just 1.6mn t in 2018.

This year, China has shifted category 6 scrap items including copper, aluminium and ferrous scrap into a restricted category, regulated with import licences and requiring quotas. The first series of quotas allowed for 372,476t of aluminium scrap imports in the third quarter. The country imported 349,510t in the third quarter of 2018.

But the fourth-quarter quota is for just 32,940t of aluminium scrap imports, and China's longer-term intention is to eliminate scrap imports.

For ferrous material, China's third-quarter quotas totalled just 20,918t, and the latest fourth-quarter quota was for just 1,770t. The campaign to eliminate scrap imports is more advanced for ferrous materials, and China's imports of steel scrap fell to zero for the first time this century in August.

The net result of this policy action is that much of the scrap that had been making its way to China from, chiefly, the US is now being routed to Europe, spiking scrap availability in that market and pushing prices down sharply.

Argus' assessed price for taint-tabor aluminium scrap today stands at €700-750/t, down from €950-980/t at the start of September. Tense scrap has fallen to €730-800/t from €930-970/t over the same period.

Soft demand for aluminium alloy in Europe is exacerbating the downward scrap price movement, with notably lower demand from automotive manufacturers this year as new emissions regulations and global trade tensions impede new vehicle deliveries.

'Scrap has been falling for a few weeks and there doesn't seem to be a bottom,' a second alloy producer said.

But China may well provide the relief that the market seeks as it is now looking abroad not for aluminium scrap units, but for aluminium alloy ingots.

'China can't get hold of the scrap, so the solution is to buy the ingots,' a third alloy producer said.

Although the prices that Chinese traders are offering are not yet strong enough to entice UK sellers, there are some European suppliers that have already sent shipments east.

'We now have a chance to have a strategy that could offset the European depression,' the first producer said. 'There is tremendous demand in China, and we expect a reaction in pricing.'

Chinese traders are becoming more active in this space, and if that continues European alloy producers will have another source of demand for products, increasing sales and subsequently prices for aluminium alloy and scrap.

'It depends on prices and a lot of other things, but this could be the boost that this market requires,' a fourth producer said.


News / Recommended news More
2019 - 11 - 11
India's October finished steel exports surged by 60pc to 950,000t from a year ago, according to initial estimates by the Indian steel ministry.Year-to-date exports have risen by 27.7pc to 4.88mn t for April-October from the same period in 2018. India's fiscal year runs from 1 April.A surge in hot-rolled coil (HRC) exports is driving much of the growth.Indian mills are competing aggressively with A...
2019 - 11 - 07
Scientists from the National University of Science and Technology MISiS have created new aluminium alloys that are cheap and effective to use in a wide variety of modern vehicles.Aluminium and its alloys rank second after iron alloys in terms of scalability. Aluminium is easily processed by forging, stamping and rolling; it is also characterised by low density, and aluminium products are lightweig...
2019 - 10 - 30
A team of the TSU Laboratory of High-Strength Crystal Physics is creating highly entropic alloys that differ in the unusual structure of the crystal lattice. They provide new materials with mechanical characteristics that make them suitable for use in the extreme conditions of space and the Arctic – at high and low temperatures, under load, and when exposed to radiation.The object of the physicist...
2019 - 10 - 25
To reduce the manufacturing costs of making tungsten carbide tools, a team of researchers at the U.S. Army Research Laboratory has figured out how to 3D print it into the exact size and shape they want, with little to no post-machining required, according to a U.S. patent application first made public on Thursday.Tungsten carbide is hard, so hard that it’s expensive to make it into useful tools an...
Uniris Exhibition Shanghai Co., Ltd.
Shanghai Branch
Tel:4000 778 909
Guangzhou Branch
Tel:020-8327 6389

CCEC CHINA official website
Scan the QR code to visit the official website by phone