Metal Bulletin. 22 nd International Recycled Aluminum Conference Berlin, Germany November 18, 2014 North American Scrap Supply and Demand Outlook

Transcription

1 Metal Bulletin 22 nd International Recycled Aluminum Conference Berlin, Germany November 18, 2014 North American Scrap Supply and Demand Outlook David C. Rosenblum OmniSource Corporation is a wholly owned subsidiary of Steel Dynamics, Inc. 1

2 Talking Points 1. Reasons for tighter scrap supply in North America: especially post consumer scrap 2. The upcoming scrap impact of North America s automotive aluminum growth the Ford F150 and beyond 2

3 OMNISOURCE FACILITIES OmniSource Statistics (Per Annum) Ferrous Scrap 6mm MT Non Ferrous 600,000 MT Copper Granulator 52,000 MT Aluminum Granulator 27,000 MT Heavy Media Separation 110,000 MT (in) Stainless Steel 130,000 MT Superior Aluminum Alloys 110,000 MT SDI Lafarga 90,000 MT 3

4 Reason for tighter scrap supply in North America 4

5 1) Technology less scrap generated in manufacturing facilities. 2) Scrap piles all gone: commodity supercycle from 2000 to 2008 eliminated most, if not, all scrap piles 3) Sustainability - closed loops: this behavior is growing dramatically in manufacturing facilities. 4) Corporate Scrap Management programs: reduce free market flows 5) Longer product life cars and appliances all last longer average car life in USA is 11.4 years. 6) Auto shredder shorts a) From 110 shredders 15 years ago to 330 shredders today b) Behavioral changes related to raw material inputs to shredders. 7) A380 price inversion does not reduce scrap supply but changes flows to end user a) Cost of alloying elements silicon and copper will increase outright production costs of A380 and 319 alloys. 5

6 8) Novelis 80% goal 9) Changes in consumption of Global UBC supply base: a) Mideast UBC s Alcoa Maaden Saudi Arabia b) New Asian consuming plants 1) Novelis Korea expansion 2) UACJ - Thailand c) Freight differentials - ex West Coast to Asian markets 10) New consumers for scrap 3 new Hertwich furnaces in USA 11) Construction of smaller homes in USA after financial crisis use less aluminum 12) Less Russian base metal to Japan/USA 13) Increases in aluminum content in products: reduces macro scrap supply 6

7 Automotive Aluminum Scrap Dynamics 2015 and Beyond 7

8 Automotive Aluminum Alloys 1. AA AA 6111 Percentage of Use Approximately 65% 3. AA AA 5086 Percentage of Use Approximately 35% 5. AA

9 Analysis of 6XXX Alloys Si Fe Cu Mn Mg Cr AA AA Notes: 6022 can go to numerous primary and secondary consumers basis low iron and copper 6111 is more difficult to move into primary sheet mills or extruders due to copper and manganese 9

10 Analysis of 5XXX Alloys Si Fe Cu Mn Mg Cr AA AA AA Note: These are all high magnesium alloys. Not a problem for closed loop primary consumers. However, high magnesium will be problematic / costly for secondary smelter consumption. 10

11 Scrap Generation Rates and Physical Forms: 1. Scrap generation is estimated to be approximately 40% of inbound units. 2. Some major stamping plants will shred the new production scrap and ship loose in specialized trucks. 3. Other independent stampers could ship loose stampings that will then be baled, briquetted or shredded by a third party processor. 11

12 Closed Loop Challenges 1. Industry speculation and various guestimates believe that 70% of the scrap generated will achieve closed loop status and 30% will not. 2. Segregation at stamping facilities will be impacted by numerous influences: a) Existing stamping line separation equipment b) Amount of alloys being stamped c) Labor practices within each plant will potentially dictate the amount of segregation achieved by each plant. d) Greater volume facilities will be pressured to ship scrap faster leading to potential alloy contaminations. 3. Biggest challenge will be segregation of alloys The moment a stamping plant mixes 6XXXs or mixes 5XXXs scrap values will be negatively impacted. 4. In the case of 6XXX and 5XXX mixed together these mixed units may have only a home in the secondary smelter stream due to high copper, manganese and magnesium. 12

13 Closed Loop Challenges 4. Historically, if segregation was not possible, scrap processors would package mixed 6XXX and 5XXX alloys together and call it a mix low copper clip or taboo. There are three problems with this: a) Though the percentage of 6111 in the mix low copper bale may be low the copper content of that alloy is not acceptable to most rolling mills. b) High magnesium in the 5182 alloy i.e will be very detrimental to secondary smelters who produce alloys with magnesium levels of.10 to.30 predominantly c) Removal of magnesium can be achieved by use of chlorine gas which means approximately 4% of metal content must be removed along with natural risks in using chlorine. 13

14 Closed Loop Solutions 1. There are many diverse groups chasing existing technology or developing new technologies to separate 6000 series alloys from 5000 series. Many of those facilities are on a small scale basis and right sizing them is costly. 2. However, segregating 6022 from 6111 is still a much more difficult process that has yet to be achieved but is also an objective for new technology applications. 14

15 End of Life Vehicle Recycling (Car Shredding Processes) Post Pick and pull facilities will become much more active in cannibalizing hoods/panels etc prior to shredding. 2. Shredding facilities will enhance downstream processes to capture wrought from cast alloys in Zorba and / 0r in twitch. 3. The composition of twitch, depending on process facilities technology, will become more wrought based as the 6XXX/5XXX applications grow. 15

16 Thank You 16