Essential raw materials, such as magnesium and silicon, are in short supply for aluminum producers, resulting in aluminum shortages and price hikes around the world. As of October 2021, it has reached $2,934 per ton, a spike of 62 percent as compared to the previous October.
Matalco Inc., one of the major aluminum producers in the U.S., has warned customers about limiting deliveries due to the difficulty in procuring raw materials and soaring natural gas prices. The giant aluminum producer has cautioned that the rationalizing of aluminum supplies will take place with an immediate effect for next year amidst the supply chain crisis. The world’s eighth-largest aluminum producer, Alcoa, has also declared force majeure, which is a clause that relieves the company from having to perform contractual obligations amidst certain events, either internal or external, that are beyond its control. This economic unrest is stirred by China’s energy crisis, skyrocketing aluminum prices by 300 percent in less than two months.
Though industries are ramping up production to meet global aluminum demand, it will take a while to reduce demand growth. Until then, remnant aluminum recycling could be an ideal way to bridge the supply chain gap.
In this article, we detail some of the causes of the global aluminum shortage and why metal recycling can help manufacturers save money and keep their operations running efficiently until supply chain disruptions have been resolved.
Causes of the Global Aluminum Shortage
One of the biggest reasons for the current aluminum shortage is the global magnesium shortage. Magnesium is often added to many aluminum alloys to give them more desirable properties, such as higher strength.
China is the world’s largest producer of magnesium, accounting for nearly 87 percent of the global magnesium supply. However, China experienced a power crunch in 2021 due to the high costs of coal and a ban on imported coal from Australia. To counter this, China’s government has begun power rationing. This, coupled with a new environmental policy aimed at meeting the carbon emission targets set for 2021, has forced many magnesium production plants to cut production by half, with some plants forced to shut down completely.
Recycled Aluminum Can Save Money and Maintain Operations
As it gets difficult for aluminum producers to find new sources of raw material, some producers, as well as many manufacturers, fabricators, and machinists, are recycling and purchasing aluminum remnants to keep their operations running efficiently.
Reusing remnant aluminum can enable you to fight the current material shortage and price inflation to the maximum extent. Not only can great value be found in recycling metal scraps, but it’s also better for the environment than purchasing new metal sourced straight from the mill. By avoiding the steps that raw material manufacturing requires, greenhouse gas emissions and energy consumption are significantly reduced.
Manufacturers with scrap metal that can no longer be used in production processes can find value in recycling it to a local metal supplier that will pay them for it, while smaller machine and fabrication shops can find value in purchasing remnant metals, such as aluminum, which are often cheaper than new materials sourced from the mill. When the quality of the remnant metal is important, many metal recyclers offer metal verification using tools such as Thermo Fisher Scientific XRF analyzers that establish the exact composition of the metal.
Aluminum Recycling in the Bay Area and Nationwide
At Industrial Metal Service, we offer reliable metal recycling pick-up services, and we accept many types of metals and alloys, including aluminum remnants. For local customers in the San Francisco Bay Area, we can deliver customized barrels (up to 55 gallons) as well as forklift-compatible bins and roll-off containers for your specific recycling needs. We also accept tooling and other scrap metal by mail from anywhere in the U.S. For small and valuable pieces of scrap, we suggest using Flat-Rate boxes from the United States Postal Service.
Apart from aluminum, you can take advantage of our “ultimate recycling” business model to generate cash from other metals such as brass, bronze, old tungsten carbide tools, aerospace metals, and superalloys like Invar and Monel. We also use Thermo Fisher Scientific XRF analyzers to verify the quality and composition of the remnants you purchase.