Aluminum is replacing plastic as the greenest bottle

The drive to turn products more eco-friendly is sweeping through the U.S. beverage market, with plastic being replaced in everything from red Solo cups to Coca-Cola Co. and PepsiCo Inc. water bottles.

In place of the petrochemical material, aluminum is emerging as a more sustainable option to cater to environmentally conscious consumers. That shift is threatening to dislodge the entrenched position of plastics in the American drinks industry, while helping boost shares of companies such as Ball Corp., the biggest aluminum can producer in the world.

Most of the plastic the world has made so far has been discarded as waste, causing environmental and social damage of $2.2 trillion a year as it pollutes the globe’s oceans, according to research from Frontiers in Marine Science. The Aluminum Association estimates that almost 50% of the cans made of the lightweight metal in the U.S. are recycled, compared with about 29% for plastic bottles.

Companies are responding. Firms including Nestle SA and Unilever have announced plans such as changing wrapping material and making packaging recyclable or resuable. Coca-Cola said in August that it’s putting its Dasani water brand into aluminum cans, which followed rival PepsiCo’s announcement that it would experiment selling its own water brand, Aquafina, in cans at restaurants and stadiums.

“This growth has happened so quickly that we’re just trying to keep up with demand,” Ball Chief Executive Office John Hayes said in a telephone interview. “This has all been driven by the consumer.”

The Broomfield, Colorado-based company’s stock is up about 56% over the past 12 months, making it one of the top 10 performers on the S&P 500 index of equities. It was little changed Wednesday at $72.12. In a bid to boost the appeal of aluminum containers, the company went after the plastic red Solo cups — ubiquitous at football tailgates across U.S. college campuses — with a metal competitor.

Demand in the U.S. for can sheet — the type of aluminum used for beverage cans — will grow about 3% to 5% a year through at least 2025 as metal cans gain further market share against plastic, according to research firm Harbor Intelligence. By contrast, growth was effectively flat for the last 20 years, with all but one mill in the country shutting operations.

“The brand owners are now getting on board — you’ve seen it with Aquafina and Dasani and a whole litany of others,” said Hayes. “But now NGOs and policy makers are also saying, ‘Wait a minute here, we are polluting our planet, and our constituents want it stopped.’”

Previously, U.S. producers typically focused their efforts on the auto industry, letting imports fill the needs of can manufacturers. Alcoa Corp., the largest American maker of the metal, was one of the firms that was ramping up its automotive sheet production as part of a supply-agreement with Ford Motor Co. Now, it’s also bullish about can sheet’s future.

“We’ve started to see that the North American can shipments are showing signs of growth,” Tim Reyes, Alcoa’s executive vice president of aluminum who is soon to become the Pittsburgh-based producer’s chief commercial officer, said in an interview. “There’s a lot of advantages toward using aluminum for sure, and I think that’s the trend that we’re seeing now versus the disadvantage of a single-use plastic beverage container.”

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Shipments of aluminum and nonferrous metal products climb 4.2 percent in June

The previous month saw shipments for the same category decrease by 0.6 percent ($49 million).

The Census Bureau provides monthly broad-based data on current economic conditions as well as indicators of future production commitments in manufacturing. The statistics are a good indicator for future economic conditions.

Data is collected from approximately 3,100 companies representing manufacturers with $500 million or more in annual shipments. It is broken down into 89 industry categories of units that may be divisions of diversified companies, homogenous companies or single-unit manufacturers.

The statistics include the value of shipments as provided by manufacturers, new orders (net of cancellations), end-of-month order backlog/unfilled orders, end-of-month total inventory, materials and supplies, work in progress, and finished goods inventories at current market value or costs.


Press Metal Aluminium recorded 36% YoY drop in net profit in Q2 2019; Revenue declined 12.5%

Press Metal Aluminium Holdings Bhd, the leading aluminium producer in South East Asia, has reported a drop of 36 per cent in net profit in the second quarter of the year ended on June 30. The profit came in at RM102.89 million, compared to RM160.6 million in the same period last year.

With this, earnings per share in Q2 2019 came down to 2.56 sen from 4.15 sen year-on-year, while revenue dropped 12.5 per cent from RM2.44 billion in Q2 2018 to RM2.13 billion.

The total net profit for the first half of the year (H1 2019) stood down as well at RM217.99 million from RM311.08 million in the same period last year. Revenue for the same period contracted from RM4.56 billion in H1 2018 to RM4.3 billion.

Nevertheless, Press Metal’s board of directors have approved a second interim single tier dividend of 1.25 sen per share, amounting to RM50.44 million, in respect of FY19, payable on Sept 24.

The company said its low-cost model ensured profitability, while the former had been operating in a challenging macro environment exacerbated by ongoing trade tensions.

With alumina prices dropping to approximately US$300 per tonne in August 2019 from the year high of US$417 per tonne, Press Metal expects profit margins to improve in the latter part of 2019.

“Aluminium, being the emerging metal of choice with its green characteristics, has the potential to further replace traditional materials. The long-term prospects are promising as we foresee wider applications across multiple industries,” the aluminium producer added…

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Coca-Cola follows suit and announces shift from plastic to aluminum, reinforcing the Aluminum Can Revolution 2.0

Coca-Cola announces moving its Dasani water to aluminum packaging. In a news release today, Coca-Cola announced putting its Dasani brand of water into aluminum packaging as part of a pipeline of sustainable packaging innovations. The new aluminum cans will launch locally in the Northeastern part of the US next month and expand to other regions in 2020. The new aluminum bottle will become available in mid-2020.

HARBOR coined the term “Aluminum Can Revolution 2.0” based on the forecast of growing demand for aluminum cans and aluminum cansheet in the wake of the environmental challenges of plastic waste. Decades ago, during the late 1970’s to the mid 1990’s, aluminum cansheet demand growth was robust from material substitution from steel to aluminum; what HARBOR has called the “Aluminum Can Revolution 1.0”. During the late 1990’s to as recent as a year ago, there was essentially no structural growth in aluminum cansheet demand. Now, boosted by material substitution from plastic to aluminum, the industry is entering a period of growth; the “Aluminun Can Revolution 2.0”.

PepsiCo announced a similar shift from plastic to aluminum in late June. PepsiCoannounced that it would no longer package bubly (sparkling water beverage) in plastic and will begin offering its branded water, AQUAFINA, in aluminum cans to US food service outlets (sporting events, restaurants) with plans to test the move to aluminum in the retail market. These changes will go into effect in 2020.

Additionally, both Coca-Cola and PepsiCo have stepped away from a plastics lobbying group. Coca-Cola and PepsiCo have stopped participation with the Plastics Industry Association, whereby they believe participation in such an association could taint their images as companies working to find solutions to plastics pollution.

US domestic rolling mills with capability to produce aluminum cansheet are poised to gain as they are able to switch product mix, utilize scrap at historically low prices, and meet the increased demand.

Copyright: This report and its content is confidential, proprietary, in some cases trademarked and/or copyrighted, and constitute trade secret(s) material of HARBOR Aluminum Intelligence Unit, LLC, there use is for authorized subscribers only. No portion of this report may be photocopied, reproduced, retransmitted, distributed or otherwise redistributed electronically, in print or verbally without prior written authorization from HARBOR Aluminum Intelligence Unit, LLC.

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Changes to Aluminum Tracking Codes Will Help Address Product Misclassification, Transshipment, Duty Evasion

  • HTS codes are used to classify all goods, and for tracking global trade flows.
  • The Aluminum Association requested 75 changes to the system to more accurately classify aluminum and aluminum products in “Chapter 76” of the Harmonized Tariff Schedule.
  • The Interagency 484(f) Committee (which includes representatives from the USITC, Census Bureau, Customs and Border Protection (CBP) and other affected agencies) approved 41, denied 7 and deferred 27 of the requested changes.[1]
  • This was an unusually high number of requested modifications and successful approvals.
  • The new aluminum HTS codes went into effect on July 1, 2019.
These changes will enable better and more accurate tracking and monitoring of aluminum trade flows, supporting free and fair trade in the marketplace.
  • The new codes specify aluminum and aluminum products with greater precision consistent with the market realities of today.
  • This will make it easier for government officials and the industry to identify and address aluminum misclassification, transshipment and evasion of duties.
  • For example, the industry was recently successful in a case against Chinese importers unfairly dumping subsidized common alloy aluminum in the U.S. market.
  • Some of the approved changes, and those still under consideration, will provide for easier identification of trade flows in the common alloy market, and make it easier to identify potential attempts to evade import duties.

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Bauxite price increases by RMB20/t after three months; A00 aluminium ingot price extends rise

After remaining muted for about three months at RMB 540 per tonne, the average price of Bauxite (6.0≤Al/Si<7.0)Shanxi has recorded a growth of RMB 20 per tonne to RMB 560 per tonne, as of July 31, learned Shanghai Metals Market. This is the third change in Bauxite (6.0≤Al/Si<7.0)Shanxi price this year, followed by a price drop from RMB 570 per tonne to RMB 550 per tonne, as of January 28, and then another decline on April 24 to RMB 540 per tonne.

The price of Bauxite (6.0≤Al/Si<7.0)Henan, on the other hand, has registered a plunge by RMB 30 per tonne to RMB 520 per tonne.  From May 5 to July 30, the Bauxite (6.0≤Al/Si<7.0)Henan price remained restrained at RMB 550 per tonne.

Backed on the rise in bauxite price, the A00 aluminium ingot price has also extended its growth from RMB 13,900 per tonne to RMB 13,910 per tonne, as of July 31, found Shanghai Metals Market. The average prices are expected to range between RMB 13,890 per tonne and RMB 13,930 per tonne, with spot contract to be traded at a discount price of RMB 10 per tonne to a premium price of RMB 30 per tonne.

The A00 aluminium ingot price in Tianjin has seen the highest rise by RMB 40 per tonne to RMB 13,920 per tonne, followed by the hike in Gongyi by RMB 20 per tonne to RMB 13,780 per tonne. In Shenyang, the A00 aluminium ingot price has increased by RMB 15 per tonne, while in other major cities the price has risen by RMB 10 per tonne.

As far as other input costs are concerned such as that of alumina, prebaked anode, aluminium fluoride, and aluminium powder, all remained restrained today at RMB 2,475 per tonne, RMB 3,137 per tonne, RMB 9,850 per tonne, and RMB 6,400 per tonne, respectively.

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Rusal Reports 20.8 Percent Rise In Aluminium Sales During Second Quarter

Russian Federation aluminium titan U.C. Rusal released operating results for the second quarter of 2019 on Friday. Production of aluminium and alumina remained essentially level, with sales in the quarter increasing to catch up on a backlog of product trapped in inventory due to last year’s OFAC sanctions.

In the first quarter Rusal produced 938 thousand metric tons of primary aluminium, up by 1 percent on the quarter. Krasnoyarsk led the way with 255 thousand metric tons of aluminium production, besting the Bratsk smelter by 3 million metric tons. Overall, Siberian smelters accounted for 93 percent of the firm’s total aluminium output in the quarter.

Sales of aluminium totaled 1,082 thousand metric tons in the second quarter, beating the prior quarter by 20.8 percent. Rusal credits a sell-down of inventories hemmed in last year by sanctions placed upon it by the United States government for the rise. Sales of value-added products rose by 59.9 percent on the quarter due to a planned gradual recovery in the overall sales mix.

Rusal’s first-quarter output of alumina totaled 1,918 thousand metric tons, off by 0.7 percent from the first quarter. Aughinish Alumina led production with 470 thousand metric tons, leading Nikolaev Alumina by 60 thousand metric tons. Rusal’s refineries in Russia made up about 36 percent of the quarter’s total refined product.


Aluminium makers expect prices to pick up even as supplies stabilise

Indian producers are hopeful of prices strengthening on the London Metal Exchange (LME) in the rest of this calendar year. supplies have stabilised after the lifting of sanctions on Moscow-based UC Rusal (the world’s second largest producer) by the US government.

Also, the decks are now clear for Norsk Hydro’s Alunorte refinery in Brazil (the world’s biggest, operating at half capacity since early 2018, when Hydro admitted it had made unlicensed emissions of untreated water) to operate at peak rated capacity. Even so, 2019 will see a shorage of 1.5-1.7 million tonnes.

“Therefore, we are expecting LME prices of to show an upward trend in the (year’s) second half,” Satish Pai, managing director, Hindalco Industries, said at the company’s recent earnings conference call.

According to a World Bank commodities report, aluminium prices on the LME will average $1,940 a tonne in 2019. These are currently driven by global macro economic uncertainty and the festering trade conflict between America and China. As a fallout, LME prices are down about 20 per cent year-to-date, at $1,809 a tonne. These had rocketed to $2,246 a tonne in April 2018, after the US curbs on UC Rusal, triggering panic in supplies.

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Aluminum tariffs lifted – Mexico-based Riisa to ramp up cross-border shipping to the U.S.

It may have gotten lost in the United States’ trade war with China and immigration battle with Mexico, but President Donald Trump’s steep tariffs on all imported steel and aluminum were lifted on May 17.

With the change in the Trump Administration’s policy, Canada and Mexico received a reprieve on steel and aluminum coming from those two countries. The Trump Administration had placed a 25 percent tariff on steel and a 10 percent tariff on aluminum imports from Canada and Mexico in March 2018 (China’s tariffs are still in place).

“The tariffs meant a big hit for everyone,” said Alejandro Ayala Quijano, foreign trade manager for Riisa, an aluminum manufacturer based in Monterrey, Mexico. “The U.S. will always be our natural market; it is the biggest market and the closest market.”

Quijano said Riisa and many companies in Monterrey are centered around the automotive manufacturing business, which uses metals, particularly aluminum. Riisa’s aluminum is also used in such products as beverage cans, which are shipped to the U.S. via trucks through Laredo.

“When the tariffs came into play, we had to think of other places to locate metal to import – like South America, Europe and countries in Asia,” Quijano said. “But it’s not the same as importing from the U.S., because then you face other challenges, like distance, other documents that you don’t usually need to file when you import from the U.S.”

Now that the 10 percent aluminum tariff has been lifted, Quijano said Riisa plans to increase exports to the United States this summer and fall. Besides its main factory and headquarters in Monterrey, Riisa also has facilities in the Mexican cities of Silao, Mazatlan, and Pachuca.

“We were lucky to get the tariffs lifted, it has been great for us,” Quijano said. “What we have to do right now is just look at the market, getting as much aluminum as possible because this is the food of our company.”

Quijano said Riisa plans to increase its aluminum import process in part by leveraging the cross-border freight marketplace from Fr8Hub, a Laredo-based digital freight company specializing in U.S.-Mexico trade.

Fr8Hub’s digital freight marketplace matches cross-border truckers, brokers and shippers throughout Mexico and the domestic United States (to and from border cities) with available carriers and drivers for their loads.

Quijano estimated that they use the Laredo port of entry up to 1,000 times a month to transport aluminum and products, but truck capacity is tight right now.

The latest FreightWaves SONAR data shows outbound tender volumes in Laredo (OTVI.LRD) increased 483 basis points, or 11.59 percent, between Tuesday, July 2 and Wednesday, July 3.

“You can see that due to the tariff changes or other changes that happen on the border, Riisa can plan ahead, sometimes they cannot, then they need to direct their team drivers from their facility in Monterrey,” said Ohad Axelrod, chief executive officer of Fr8Hub. “Then through Fr8Hub’s platform, we can provide the service that Riisa and companies like it need in order to thrive in this dynamic world.”

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Impressive growth awaits recycled metals market

‘However, unorganised flow of metals and poor scrap collection zones are anticipated to restrict the global market size in the coming years,’ analysts at Global Market Insights say. They point out that one notable issue is that most developing countries have no dedicated zones for metal recycling.

India’s automotive industry is expected to be worth more than US$ 280 billion by 2025. The country’s car production went up by 7% from 2013 to 2018 with nearly 30 million vehicles manufactured. A quarter of steel used in today’s automobiles today has been recycled and, based on its weight, a passenger car comprises approximately 65% steel and iron.

Ferrous outlook

The research found that the recycled ferrous metal market was valued at more than US$ 850 million last year. The analysts note that the overall recycling rate for steel used in construction is 98% for structural and 71% for rebar & reinforcement applications.

‘In terms of volume, recycled metal for industrial machinery constituted over 15% of the total industry share in 2018,’ the new data suggests. This is mainly due to extensive recycled metal applications in the production of machinery used across the pharmaceutical, chemical and automotive industry.

Furthermore, non-ferrous metals like copper, aluminium, lead and brass are increasingly popular in such machinery. Their excellent durability and corrosion-free nature will help make a positive impact on the overall recycled steel metal market size by 2025.

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