Russian scrap aluminium flood easing-Sims

SYDNEY - A flood of exports of aluminium scrap to Western Europe that followed the demise of the Soviet Union has slowed dramatically, recycling group Sims Aluminium Pty Ltd said yesterday. Until recently, Russia appeared to be an inexhaustible source of scrap for re-melting of used aluminium, salvaged from everything from household appliances to automobile parts, with Europe importing 500,000 tonnes a year, Sims Aluminium trading manager Graeme Wallace said. "However, that reservoir is drying up as the easy sources have been exhausted," Wallace told an industry conference. "It is thought that imports to Europe are now running at 250,000 tonnes a year," he said. Wallace said use of recycled aluminium was increasing as overall demand for aluminium grows. The average amount of aluminium used in an American-made car in 1999 was 112.5 kg, up 42 percent from 1991, Wallace said. By 2009, the figure should rise another 31 percent to 147.9 kg, Wallace said. Some of the increase will come from primary aluminium, notably in panels and bumpers, accounting for between five and six percent of the growth, Wallace said. Recycled or alloy aluminium is expected to grow two to three percent. "This will predominately be in alloy engines, which for a typical four-cyclinder vehicle would weigh around 25 kg each," he said. Wallace also said varied uses for scrap drawn from used beverage cans and extruded products were creating problems based on the fluctuating London Metal Exchange price. "The demand and supply for UBCs and extrusions are rarely in sync since although they are both highly sought by the remelt industry, their ultimate end markets and hence their demand are completely different," Wallace said. Both types of scrap metal are sought by the alloy industry for their respective chemical compositions, Wallace noted. "However, neither of them is linked perfectly to either the primary or secondary LME contract. "This makes it very difficult when the major users, the automotive companies, are increasingly trying to link their purchase prices to LME in and effort to provide long-term pricing structures with the ability to hedge," Wallace said. Extruded primary aluminium Australian fob export prices for extrusions since January 1997 recorded a discount to LME of A$$80 to $A501 a tonne, he said. Those for UBCs over the same period ranged from A$543 to $A928 a tonne, he said. However, for secondary metal, a discount of A$292 to a premium of A$372 a tonne was recorded For UBCs, the discount ranged from A$275 to $783 a tonne, Wallace said. Story by James Regan REUTERS NEWS SERVICE