Aluminum scrap supply to keep tight
----Interview with Changguo Wang
General Manager
Aili Renewable Resources (Tianjin) Co., Ltd.
- Aili Renewable Resources (Tianjin) Co., Ltd., established on November 3, 2016, is located in Room 806A, Binhai China Trade Center, east of Binhai Road, China (Tianjin) Pilot Free Trade Zone. The company focuses on civil waste material recycling, productive waste metal recycling, renewable resource technology development, and sales of building materials, metal materials, metal products, auto parts and rubber and plastic products.
- Asian Metal: Hello, Mr. Wang. Thank you for accepting Asian Metal's interview. Please introduce your company briefly.
- Mr. Wang: Founded in 2016, Aili Renewable Resources (Tianjin) Co., Ltd. is a renewable resources recycling enterprise specializing in the recycling, sorting, processing and graded utilization of secondary aluminum. At present, it has its own recycling bases in Northeast China, Tianjin, Shandong, Ningxia, Guangdong and the Yangtze River Delta. The recovery of aluminum scrap in 2021 was close to 100,000 tons, and that in 2022 is expected to reach 120,000 tons.
- Asian Metal: With the continuous deterioration of the global climate, China has set the goal of reaching carbonemission peak by 2030. What is the significance of aluminum recycling to achieve such goal?
- Mr. Wang: The most direct significance is the energy conservation and emission reduction. It not only reduces the energy consumption of primary aluminum smelting, but also decreases the emission of carbon dioxide. According to statistics, the energy consumption of producing one ton of secondary aluminum is about 95% lower than that of producing one ton of primary aluminum. At present, the average energy consumption of primary aluminum in China is about 13,500kWh/ton. Under the background of global carbon emission control, replacing primary aluminum with a part of secondary aluminum is an important means to reduce the energy consumption of primary aluminum smelting and a green circular economy strongly supported and encouraged by the state. At present, some primary aluminum plants in China also begin to deploy secondary aluminum industry, which is also an important means for them to reduce carbon emissions.
- Asian Metal: Over the past three years, the output of secondary aluminum in China increased year by year. What is the current supply situation of aluminum scrap, the raw material of secondary aluminum, in China?
- Mr. Wang: At present, China is in a supply deficit of aluminum scrap as a whole. China's aluminum output accounts for 60%-70% of the global aluminum output. China produces about 40 million tons of primary aluminum and about 12 million tons of aluminum scrap every year, while exports 8-9 million tons of finished aluminum products every year. In 2021, China imported about 1.03 million tons of aluminum scrap, but exported almost nothing, because the supply of aluminum scrap in China was insufficient. As the demand of automobile, construction, packaging and other fields in China for aluminum increased gradually, while the capacity ceiling of domestic primary aluminum has been determined, the demand for aluminum increased in the market can only be replaced by the use of secondary aluminum, and the demand for aluminum scrap will increase accordingly.
- Asian Metal: In the past three years, the supply of aluminum scrap in China has been particularly tight. What are the reasons for this consequence, and whether the situation will continue in 2022?
- Mr. Wang: In recent years, China faced serious shortage of aluminum scrap, mainly because that after the entry of foreign garbage was banned, the import volume of Zorba aluminum scrap fell sharply due to strict customs inspections. In 2021, China imported a total of 1 million tons of aluminum scrap, while the annual import volume was around 2 million tons before 2019. The main reason for the decline is that the impurity content of imported aluminum scrap does not meet the customs requirements. At present, the aluminum die castings produced in China should not only meet the needs in Chinese market, but also a large part of them are exported to overseas markets. Only domestically produced aluminum scrap cannot meet the needs of the market. In 2022, the supply of aluminum scrap in China will remain tight, especially that of the cast aluminum scrap. At present, aluminum is becoming more and more widely used in the market, and under the background of carbon emission control, it is difficult for the pure aluminum output in China to increase significantly. Some pure aluminum products will be replaced by secondary aluminum, and the consumption of aluminum scrap will increase year by year.
- Asian Metal: Since the ban on foreign garbage import in 2019, China's import of aluminum scrap decreased year by year. Will China's import of aluminum scrap be completely banned and replaced by the import of composite ingot in the future?
- Mr. Wang: A complete ban on aluminum scrap will not happen, because enterprises in the original aluminum scrap supply chain were not well prepared and didn't know the requirements of customs when the ban was issued. After 2-3 years of exploration, the standard of imported aluminum scrap is basically unified, and the import volume of aluminum scrap gradually increased in the second half of 2021. In 2021, China's import volume of aluminum scrap reached about 1.03 million tons, an increase of about 25.3% over 2020, and it will increase further in 2022. Imported composite ingot can replace part of imported aluminum scrap, but taking the profit margin and production cycle into consideration, suppliers are more willing to supply aluminum scrap.
- Asian Metal: How did domestic suppliers and consumers deal with the supply deficit of aluminum scrap after the reduction of imported aluminum scrap in the past two years?
- Mr. Wang: The world economy is integrated. When there is a shortage of a certain material in one country, it is inevitable that products from other regions will enter the country's market to supplement it. Just like the shortage of cast aluminum scrap in China in 2021, China's import volume of aluminum alloy ingot reached about 1.15 million tons, but before 2019, China almost imported no aluminum alloy ingot. We developed the trade of imported aluminum alloy ingot in the past two years.
- Asian Metal: In the future, whether the aluminum scrap of China can be self-sufficient, and what is the biggest problem in aluminum scrap dismantling in China?
- Mr. Wang: Self-sufficiency is completely possible if it is purely domestic. However, in addition to our own use, our aluminum products need to be exported every year. Because of the export, only the output of domestic aluminum scrap will not meet the demand, so for a long time, we still need to import a large amount of aluminum scrap. At present, the biggest problem in the dismantling of aluminum scrap in China is tax confusion, because the tax rebate policies of all local governments are not unified. At the end of 2021, the State Taxation Administration issued corresponding policies to regulate the taxation in the secondary aluminum industry. At present, the industry standard is gradually improving.
- Asian Metal: What is the development direction of your company in the future and whether there are new projects?
- Mr. Wang: Our company's positioning is the recycling, grade protection reduction and aluminum ash treatment of secondary aluminum, so as to help secondary aluminum enterprises truly achieve the goal of energy conservation, emission reduction and green circular economy. As for new projects, we will gradually set up our own recycling and processing bases in all provinces and cities across the country to increase the source of aluminum scrap. We will be deeply engaged in the aluminum recycling industry and try to become a leading enterprise in the industry, so as to contribute to the development of national green circular economy.
- Asian Metal: Thank you again for accepting our interview. I wish Aili Renewable Resources (Tianjin) Co., Ltd. to become a leader in the field of renewable resources recycling with a prosperous business.
- Mr. Wang: I am also very grateful to Asian Metal for providing such a communication platform for our secondary aluminum recycling industry, and hope that Asian Metal will continue to provide us with more extensive and accurate industry information.
