Platts Metals Week Aluminum Symposium -January 19, Gary Borner Vice President Spectro Alloys Corporation

Transcription

1 Platts Metals Week Aluminum Symposium -January 19, 2015 Gary Borner Vice President Spectro Alloys Corporation

2 What makes up the Secondary Industry and what is their demand? What markets are competing for secondary aluminum scrap? What is the outlook for secondary aluminum scrap in the U.S. from the casting markets? How is scrap correlating with the different indices? How much will post consumer scrap and closed loop programs slow the demand for P1020 among the mills?

3 There are approximately 17 individual secondary aluminum recycling companies with 24 plant locations in the United States. Of these 17 companies, 3 are captive to larger organizations. The characteristics and roles of these companies provide a reliable market for the scrap collection and processing industry. Secondary recyclers provide a core domestic market for scrap aluminum. Secondary recyclers provide the bridge financing between the scrap source and the end user of aluminum alloys. Secondary recyclers provide additional processing and cleaning of scrap via on-site shredders, Baghouses, and driers allowing scrap dealers to turn over their inventories quickly.

4 Aluminum Die Casting companies are seeing solid demand for 2015 and volumes YOY will increase 4.7% with 5.1% in Auto. Foundry Alloys for Automotive components are struggling to grow in the U.S. with much of that work moving across our border to the south. Those companies that remain are using more high purity alloys (includes A356.2 primary and derivitives). This effects the market for MLCC, Ptd Siding and Extrusion. The aluminum foundry alloys for structural components are also coming in the form of newly introduced alloys like 365, Aural 2 and others which are often primary based. A356.2 wheel manufacturers are also looking to add recycled content into the supply chain which will create an opportunity for recyclers and replace units out of the Primary Aluminum supply chain. Re-shoring and Near-shoring is growing in North America with Mexico the winner in this shift. Aluminum castings in Global Auto market expected to increase up to 50% in pounds by 2025.

5 Automotive castings which covers powertrain, engine components and some structural parts accounts for almost 75% of the market. Non-Automotive Engines makes up and additional 11% (Flat to low growth) The larger segments of the balance is Appliance, B & C, Recreational products, Lighting, and Electrical / Industrial.

6 Peddler Scrap Industrial Scrap Auto Salvage Scrap Scrap Dealers / Scrap Brokers Supply Funnel

7 Slight Growth Secondary recycler Contraction / diversion Choices Export Moderate Growth Toll (Rotary) Strong Growth Mills/Cast Houses

8 Secondary Scrap Markets 350,000,000 3,968,000,000 3,800,000,000 1,600,000,000 Secondary Smelters Toll Plants (includes dross) Export 3,935,246,700 Mills (not including closed loop) Others

9 Secondary Smelter Scrap requirements by volume High Grade Low Copper Scrap 25% Low and Mixed Grade Scrap 75%

10 Secondary Smelter Scrap requirements by volume Strong High Grade Low Copper Scrap 25% Growing Low and Mixed Grade Scrap 75%

11 6063 Billet Price Indication by Year $2, $2, $2, $2, $2, Billet Price Indication by Year $2, $2, $2, $2,

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13 400,000, ,000, ,000, ,000, ,000, ,000, ,000,000 50,000, Growth Nasaac Stocks LME Alloy Stocks Export Cuts 2013 Export Cuts 2014

14 Nasaac Stocks Live Tonnage at 62,940 mt OP.Stock Live Tonnage Can Tonnage Baltimore Chicago Detroit Los Angeles Mobile New Orleans Owensboro St'Louis Toledo

15 Nasaac Cash Price vs. Auto Shreds Molten Value (89% Rec) Axis Title /06/14 01/27/14 02/17/14 03/10/14 03/31/14 04/21/14 05/12/14 06/02/14 06/23/14 07/14/14 08/04/14 08/25/14 09/15/14 10/06/14 10/27/14 11/17/14 12/08/14 12/29/14 Auto Shreds Molten Value Nasaac Cash Price

16 Platts MW A380 price minus PMW HG Auto Shreds Spreads PMW A380 vs PMW HG Auto Shread SPread /06/14 02/06/14 03/06/14 04/06/14 05/06/14 06/06/14 07/06/14 08/06/14 09/06/14 10/06/14 11/06/14 12/06/14 Spread based on Recovery Avg Recovered Spread

17 Sustainability initiatives for aluminum scrap will continue to grow, however, it is likely to be a zero sum game. Secondary Smelters Market growth is steady and the companies are stronger financially as an industry. North American demand will grow as re-shoring and nearshoring will accelerate in the next few years. Exports will continue to swing and provide moderate volatility. Primary aluminum LME prices could be depressed for the short term with MW premiums and alloy/form premiums making up the difference and still yield a high all in price for the primary industry. Consumers need to know how to manage each aspect of risk! With most secondary scrap already having a mature market to end up in every new pound of aluminum content added to a vehicle will likely have to come from P1020.

18 Nasaac stocks for replacement units? Overseas scrap and off-grade primary? U.S. exports drying up further and more scrap staying here? The "hot" trend of Chinese "Semi's entering the world discount price by receiving export rebates forcing other units to the U.S.? One thing is certain, the search for value will not stop!

19 There is no Fight for Scrap, there is no Scrap Gap, there is only the search for value!

20 Thank You!