Secondary Aluminum Alloy Market Trends

Growth Drivers

• Increasing Demand in the Automobile Industry –The growing emphasis on decreasing vehicle weight, enhancing fuel efficiency, and minimizing carbon emissions is likely to increase demand for secondary aluminum alloys in the automotive industry in the future years. For instance, in 2022, BMW, a German manufacturer of luxury vehicles, announced to use alloy-cast wheels using secondary aluminum.
• Growing Demand for a Green and Safe Environment – Secondary aluminum alloys are manufactured from repurposed aluminum, resulting in improvements in waste reduction and resource conservation. Moreover, major companies have also started adopting secondary aluminum in order to contribute to reducing greenhouse gases and creating a better environment. According to the Aluminum Association, there is a 10% rise in aluminum end-of-life recycling rates, which cuts greenhouse gas emissions in the industry by 15%.
• Growing Age of Airplanes- The active global commercial fleet now stands at 25,368 aircraft, with a 3.4% net annual increase predicted over the next ten years that will increase the total to 35,501. Moreover, the average lifespan of the active fleet will have reduced from 11.2 to 9.7 years by 2027. Over 20,400 new aircraft will be added as a replacement for 50% of existing aircraft. Aluminum is the primary composite material of the aircraft; therefore, a higher replacement will lead to demand for more secondary aluminum alloys.

 Challenges

• Heavy Dependence on Imports - Around 85-90% of the total raw material needed for recycling is sourced through scrap imports, which can pose various risks for recyclers. Such risks include exposure to currency fluctuations, volatility in global scrap prices, and upfront cash payments that can lead to working capital shortages, and longer turnaround times. Furthermore, the heavy reliance on imports means that any potential increase in duty rates on scrap imports could negatively affect the profitability of recyclers unless they can effectively pass on the costs to customers which is anticipated to hamper the market growth.
• Lack of Automation
• Availability of High-Strength Composite Material