Iran’s Aluminum Scrap and Waste Market Outlook Report

Product Description

With a GDP of $415 billion in 2019, Iran was the third largest economy in the region that year. While the country’s economy was steadily growing after the drop in 2012 due to the sanctions, it dipped once again in 2019 thanks to the return of the sanctions. Although the production of aluminum has a longer history in Iran compared to other countries in the region, it currently stands as the sixth largest producer on a regional scale. Nonetheless, as new aluminum smelters are commissioned in the country, it will definitely advance to the fifth place.

Market drivers of aluminum scrap and waste

As a secondary source of raw material for downstream plants, aluminum scrap is always priced lower than primary aluminum. The lower production costs as a result of the price spread between primary and secondary aluminum make scrap more attractive to producers. The discount of scrap over aluminum is expected to increase as supply grows, leading to higher consumption. Moreover, using scrap from similar products with similar alloy content reduces the need for alloying. This will in turn significantly reduce the consumption of alloying elements. Yet this is true only when using sorted aluminum scrap. Over the recent years, as demand for scrap has grown and the value of scrap has been recognized, collection and sorting have improved.

The most important factor that limits scrap consumption is the impurities that can lead to lower-quality products. This puts pressure on scrap consumption or restricts it to applications where the chemical composition is not crucial. With the increasing demand growth for higher-quality products, demand growth for scrap will be under further pressure.

Overview of Iran’s aluminum scrap and waste market

About a quarter of total aluminum consumption in Iran is sourced from scrap, and that share has increased over the recent years. However, collection rates in the country are still lower than the global average, which is partly due to the fact that end users do not sort their waste and there is not enough stimulus to encourage them to do so. Moreover, scrap is mostly collected in small volumes, putting further pressure on collection rates. But as aluminum prices hit new record highs over the recent years, recycling has gained more attention.

The trade balance of Iran’s aluminum scrap and waste has always been slightly negative, tipped towards net imports. As scrap collection and sorting improved, the trade balance has also improved, but it is expected to remain in negative territory. Iraq has been a major supplier of scrap to Iran’s market, and it is expected to remain the main source of imports over the coming years.

Breakdown of Iran’s aluminum scrap and waste market

Domestic aluminum waste and scrap supply (both new and old, separately) in the forecast timeframe as well as the previous period has been broken down using three factors. The first factor breaks down the market into three categories based on alloy material: commercially pure aluminum, heat-treatable alloys, and non-heat-treatable alloys. Past and future trends for each type of material have been analyzed. Heat-treatable scrap holds the largest share of the market. In the second breakdown, products are distinguished based on product type: lithographic sheet, used beverage cans, wires and cables, radiators, extrusions, pots and pans, engine pistons, other cast auto parts, tiles and dampa, boring and turning, and other products. The domestic aluminum waste and scrap market has also been broken down into soft and hard scrap over the timeframe; hard scrap holds the main share of the market. Finally, using the third factor, aluminum scrap is categorized based on the type of consumers. Secondary smelters are the largest consumers of aluminum scrap.