What Drives Recycled Aluminum Pricing?
The world of recycled aluminum can be complex, and pricing for aluminum can cover a pretty wide spectrum as well. S&F Development has had the liberty of working with manufacturers of all sorts as well as recyclers on the buy and sale side. I've found myself on more than one occasion having the conversation about why different types of aluminum fetch a different price. While there are a million and one variables that drive the price for recycled aluminum grades, we're going to dive into a few.
One thing that drives almost every commodity market on the planet is supply and demand, but a look deeper into these factors is always warranted. Other economic factors behind the supply/demand dynamic can paint a better picture for us to understand rebates for recycled material.
Downward pressure on manufacturers to use more sustainable packaging could create a higher demand for aluminum to be used for beverage containers vs the polyethylene counterpart.
Talks of sanctions on foreign countries such as Russia, banning the export of Aluminum caused a shift in pricing on aluminum materials.
Energy and labor cost as well as inflation can also play a role in rebates for recycled aluminum
The grade of aluminum plays a large roll in the rebate that is offered. While there are hundreds of grades of raw aluminum, recycled aluminum grades are generally broken down into just a few categories. The grade of aluminum is typically determined by the alloy, contamination, or use.
Aluminum cans or UBCs (Used Beverage Containers) for example, normally have various levels of moisture when they are delivered to the scrap yard or material processing facility (MRF). When recyclers set rebate pricing for these materials they also need to account for the moisture loss from the baling process.
Aluminum Breakage is priced in a similar fashion because this material contains contaminants such as iron, plastic, or other materials that are connected to or mixed in with the aluminum thus causing the aluminum recovery rate to be much lower than other grades.
MLC or Extrusion on the other hand, tends to come from the post industrial process and will likely be clean and free from contaminants. Some of these may have a poly coating while some may not, this may affect the price slightly but the poly will burn off in the smelting process.
Aluminum Litho Plate is another grade that is highly competitive in rebate pricing due to it's high purity of aluminum.
Aluminum turnings on the other hand may have a high aluminum content but they tend to be very light and freight can be costly to get the turning from the manufacturer, to the recycler, and ultimately to the end user.
In order to get the most out of your aluminum scrap we always advise our clients to take the time to separate their aluminum scrap by grade, keep it out of your steel container, and keep it free from contaminants as well as possible.
As always, S&F Development is here to partner with our clients on their behalf and help take your recycling program to the next level.