Eccomelt Participates at IMEDAL Annual Meeting in Mexico City | Eccomelt

The Eccomelt Team participated in the IMEDAL’s (Mexican Aluminum Institute) annual meeting in Mexico City on the 4th of December 2019. At the meeting, Martin Hartlieb, technical advisor for Eccomelt, delivered a keynote presentation on the economic outlook for 2020, including the potential impact of the USMCA. A review of President Obrador’s first year in office revealed that the main concern of the Mexican aluminum industry is the economic slowdown combined with uncertainty over strong market volatility due to unforeseeable political changes. The Mexican GDP growth this year is 0%, and next year only 1% is predicted. Indeed, the fact that US president Trump tweeted just days earlier about the re-imposition of duties on aluminum from Argentina and Brazil only emphasized the unpredictability of the 2020 North American supply chain.

The USMCA is scheduled to take effect on January 1st, 2020, and although its ratification in the USA seems to be imminent, its exact implementation date, along with its impact on the aluminum industry, are still unclear. We know that the new rule states that a minimum of 70% of all aluminum for vehicle components, directly and indirectly purchased, must come from either Canada, Mexico and United States. Since a significant portion of the production of auto parts in Mexico goes to the US market, while at the same time off-shore metal represents a large share of Mexico’s primary aluminum supply, this new rule is significant. Other “Regional Value Content” rules for vehicles could further restrict the off-shore aluminum content in vehicle components. As a panacea, eccomelt356.2 was presented as an ideal option to mitigate any shortfalls, as it is 100% recycled material of North American (US and Canadian) origin. Eccomelt356.2 also addresses the increasing need for sustainable solutions in Mexico, which, as was made clear at IMEDAL, will gain ever-growing importance in the coming years, as recycling content and carbon footprint are becoming more and more an integral part of doing business. Indeed, eccomelt356.2 is already used in significant quantities by Mexican aluminum processors to replace primary A356.2 or as a basis/additive to other high-quality alloys.

IMEDAL Covers Global Aluminum Market & China

The discussion at IMEDAL inevitably covered the global aluminum market and in that of China, where it is balanced, a first in China in almost ten years (China has been in a surplus for almost a decade, while the rest of the world had mostly a deficit). For the coming year, most analysts agree that there will be a surplus, especially outside China, unless we see some of the currently predicted shutdowns (Rio Tinto in New Zealand or Alcoa in Australia). As a result, a surplus will bring downward pressure on the LME price, which could be amplified after February when the LME will implement new rules for inventories in warehouses. With little or no contango, less motivation on the part of investors is expected, and less demand from their side is inevitable.
The major demand sectors for aluminum in North America are transportation, building and construction, and packaging. Although a shift to higher electrification will impact aluminum consumption both in terms of alloys, products and process technologies, less overall growth is expected this coming year in the automotive/transportation sector. The same can be said for building and construction and packaging (which is always rather a stable market). As a result, participants at the annual IMEDAL meeting agreed that there is much less likelihood for an LME price increase in the coming year.
Scrap and secondary aluminum markets have gone through even more dramatic downward trends in terms of pricing than primary aluminum. Since the implementation of China’s” Green Fence Initiative” and an import stop of most scrap including aluminum, the aluminum scrap prices have dropped over the last 18 months dramatically along with the price of secondary A380 aluminum alloy. A380 has in the past traditionally been traded around the primary aluminum (P1020) price, but for the last two years it has been moving far below the primary price. Most participants at the annual IMEDAL meeting agreed that on the scrap and secondary pricing we probably have reached the floor and should see pricing at least stabilize if not increase again in the coming year.

Eccomelt356.2 – a Cost-Effective A356.2 Alternative

Alongside Alcan R&D, Eccomelt has developed a patented revolutionary process that produces a specification alloy (A356) from aluminum wheels at a lower cost than any traditional method and that meets the US EPA definition of CLEAN CHARGE.
Eccomelt ships products to foundries and casthouses within North America including the United States, Canada, and Mexico, and worldwide, such as France, Ireland, Italy, Serbia, and Spain. Our product is the material of choice for many consumers because it is chemically pure and environmentally-friendly. Its shredded form has achieved higher melting rates than Ingot, Sow or T-Bar. Environmental testing has also proven the process eliminates all coatings and no harmful emissions (smoke/fumes) are generated during melting.
If you have any questions about our products or about the ALUMIMUM conference and our participation, you may contact us at (888) 356-9557 or fill out our contact form. We would be delighted to hear from you.