Aluminium scrap import rises with surge in primary metal prices

Government wants to promote scrap recycling as an ecofriendly step

India’s import of aluminium scrap jumped 11 per cent in the first seven months of the current financial year, on a sharp increase in prices of primary aluminium on the benchmark London Metal Exchange (LME).

Rising demand for secondary aluminium products from the automobile and housing sectors fuelled the scrap import. Data compiled by the Directorate General of Commercial Intelligence and Statistics (DGCIS) showed this import at 0.63 million tonnes for April-October 2017, compared to 0.57 mt in the corresponding period a year before. On an annualised basis,  aluminium scrap import should cross a million tonnes in 2017-18, to an estimated 1.08 mt. That would be a record high; it was 0.93 mt in 2016-17.

Producing aluminium from scrap requires only five per cent of energy as compared to production of primary metal from alumina, a derivative of bauxite. And, with an eye on mineral conservation, the government wishes to promote scrap recycling.

Since there is no loss of any metallic property in recycling, scrap processing protects the environment, conserves the bauxite mineral and provides huge rural women employment in segregation of metallic and non-metallic wastes. Hence, the government should encourage metal recycling and reduce the import duty on aluminium scrap to zero from the existing 2.5 per cent,” said Rohit Shah, managing director, Heena Metal, a  recycling unit based here.

Units like his were helped by the surge in primary aluminium prices on the LME; this has risen since May by nearly 10 per cent to $2,238 a tonne. Over the past two years, these prices have jumped by around 50 per cent.

Aluminium recyclers import scrap at $1,500-1,600 a tonne. They incur another 10 per cent of expense on conversion. With they produce value added products, the margin could go up to 50 per cent. 

“Secondary aluminium production is the process of recycling scrap into aluminum that can be used again—an environmentally sound process that is 95 per cent more energy-efficient than primary production. The recycled aluminium sector is highly fragmented, with around 10 medium sized players and 150-200 small ones, as it has low entry barriers and low capital costs,” said Sanjay Mehta, president, Metal Recycling Association of India.