Saudi Arabia’s Aluminum Scrap and Waste Market Outlook Report

Product Description

With a GDP of over $792 billion in 2019, Saudi Arabia was the largest economy in the region that year. The country’s economy, the second richest country in terms of natural resources, is heavily dependent on oil, its main natural resource. But since the introduction of the 2030 Vision in 2016, the country has determined to minimize oil reliance. In accordance with the goals defined in the vision, state-owned Ma’aden signed a joint venture agreement with Alcoa for aluminum smelting capacity in 2010; the first primary aluminum was produced in 2013 and before long, the operation was ramped up to full capacity. In the early years, Ma’aden had to import alumina due to technical issues in its alumina refinery as well as the tightness in alumina supply. After 2015, when these issues were resolved and the alumina refinery capacity was completed, alumina imports decreased. The country’s alumina demand is currently met almost entirely from domestic mineral reserves. This minimizes the risk of raw materials for aluminum production to very low levels. As a result, the country’s downstream aluminum part has rapidly developed over the recent years.

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 Saudi Arabia’s aluminum scrap and waste market

A small part of Saudi Arabia’s aluminum demand was accounted for by scrap and waste. On this basis, the country has been the largest exporter of aluminum scrap and waste in the Middle East. The weak domestic demand for scrap is mostly the result of the small capacity of secondary smelting and the low output of secondary unwrought products. Estimates show that the country’s aluminum scrap recycling input rate is about half the global average. Considering the weak drivers of secondary capacity development in Saudi Arabia, even if Ma’aden’s primary smelters come online, the driving force has further subsided and the country’s scrap trade balance is expected to remain positive or even slightly move up in the coming years.

Breakdown of Saudi Arabia’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.

Key players in Saudi Arabia’s aluminum casting parts market:

• S J Iron & Metals
• Aluminium & Iron Co. W.L.L