Industry driven & social value, the development of recycled aluminum is both sufficient and necessary. Sufficiency: the natural property of recycled aluminum (stable physical and chemical properties of multiple cycles) determines that it has high-quality recovery rate and economic value. At the same time, the existing “social mines” precipitate sufficient aluminum waste, which has the basis of large-scale recovery; Necessity: the carbon emission per ton of recycled aluminum is only about 0.23 tons, which is significantly lower than the electrolytic aluminum technology path; Under the top-level policy constraints of “double carbon and double reduction”, recycled aluminum plays an incremental role of low-carbon aluminum source. In addition, the graded utilization of recycled aluminum can make full use of other small metals in aluminum alloys, and the cost dimension of recycled aluminum is significantly better than that of primary aluminum. Under the two-way support of policy guidance and commercial value, recycled aluminum, especially the graded utilization industry, welcomes the high light period of development.
Development status of recycled aluminum in China: new opportunities are bred under the mature track mode. The four core indicators of recycled aluminum path are available amount of waste aluminum, recovery rate, recovery rate and application type. In terms of quantity, China’s per capita aluminum stock in 2019 was 207kg, corresponding to the total social stock of 290 million tons, 55.2 times the available amount of waste aluminum in that year, significantly higher than the overall service cycle of waste aluminum, which proves that China is still in a period of waste aluminum, and there is room for a significant increase in the total amount of waste aluminum. The recovery rate and yield rate have increased from 70% and 74% to 77% and 90% respectively from 2010 to 2020, corresponding to the volume of recycled aluminum in China’s waste aluminum in 2020 is about 4.97 million tons, and the average annual increment in the past five years is about 214000 tons (excluding the imported recycled amount of overseas waste). In terms of recycling application, about 80% will be used for Castings in 2019, and only about 5% will be reused for the production of sector, strip and foil. The grade protection utilization remains to be popularized.
Upgrading Utilization & yield is the core of realizing excess benefits. Guaranteed utilization means that the enterprise regenerates aluminum alloy raw materials consistent with the model of waste aluminum according to the proportion of waste aluminum raw materials and trace elements in the waste, which can continue to be used in the application scenario of waste aluminum incoming materials and reuse the value of trace elements in the waste. In addition, by unifying the waste grade and building a special recycling process enterprise, the yield of waste aluminum can be improved. Taking the waste of cans as an example, under the level of realizing the guaranteed utilization and 88% yield, the cost per ton after tax can be saved by 1149 yuan / ton at the average price of the year, and 538 yuan / ton after tax at 82% yield.
“Social mine” has rich reserves, structural upgrading and profit space. From the three dimensions of space, speed and structure, under the neutral assumption, 8.55 million tons of recycled aluminum can be recovered from Chinese waste by 2025, with an average annual increase of 882000 tons, including 4.04 million tons of grade guaranteed utilization. With the increase of 88% yield, the overall cost balance space will reach 4.6 billion yuan. On the other hand, taking nobelis as an example, it has built a multi-dimensional tank material recycling system through the invention of special tank materials, global promotion and the construction of recycling stations in many countries. It took many years to realize systematic graded utilization. To improve the yield rate, we need to build and reshape the whole industrial chain, which is difficult to overtake in the curve in the short term. Under the limited amount of waste aluminum supply, the industry has a significant first in advantage, and the advantageous enterprises will realize the cost advantage in the long term.
Investment suggestion: China’s existing recycled aluminum grade protection and utilization system is still in the construction stage, and the recyclable volume will meet the rapid growth period. The production line enterprises with the technology of grade protection and Utilization & yield improvement are expected to maintain the track advantage and continue to reap industry dividends. It is suggested to pay attention to Henan Mingtai Al.Industrial Co.Ltd(601677) , the leaders of large-scale recycled aluminum recycling Shandong Nanshan Aluminium Co.Ltd(600219) , Ye Chiu Metal Recycling (China) Ltd(601388) Lizhong Sitong Light Alloys Group Co.Ltd(300428) 、 Chongqing Shunbo Aluminum Co.Ltd(002996) 。
Risk tips: the risk of policy change of recycled metals, the risk of aluminum demand falling short of expectations, the risk of technology change, etc.
