The chief executive of Novelis has said that it is having to expand its own recycling capacity as it struggles to get material due to the slump in the price of aluminium.
Phil Martens told Reuters that Novelis plans to double the proportion of scrap it uses as raw material by 2020 worldwide. It also plans to build its own processing facilities to protect itself from supply restrictions caused by fluctuations in the primary aluminium price on the LME.
He added that with the price on the LME having fallen below $2,000 per tonne, this has made the issue more noticeable as scrap dealers and other traders seek to hold onto used beverage cans until the price rebounds.
Martens said: “It does lead to a tighter supply situation in the UBC market because the scrap dealers tend to hold material in the hope that the LME will bounce back up. If you have the recycling capability on an internally integrated basis, you can start to shield yourself from some of the fluctuations in the marketplace.”