Newsworthy

Metals

Spectro Alloys to invest $71M in expansion project

Spectro Alloys, an aluminum recycler headquartered in Rosemount, Minnesota, will invest $71 million to expand its aluminum recycling capabilities at its Rosemount campus with the addition of equipment to sort and melt postconsumer aluminum and cast it into various sheet and billet alloys.

The company says the expansion is in response to the growing market for recycled aluminum sheet and extrusions driven by consumer demand for sustainable products, green building standards, a stable domestic supply chain and cost savings associated with recycled material and the need for improved recycling rates in Minnesota.

Spectro Alloys says it will break ground on the project in 2024 and be operational in 2025.

The company is expanding its Rosemount campus to roughly 42 acres and will build a new 90,000-square-foot building along Highway 55.

Spectro Alloys estimates the first phase of the project will result in up to 120 million pounds per year of added recycling capacity.

The facility will include industry-leading automation and equipment for sorting, melting, casting and homogenizing aluminum scrap, Spectro says, and the best available technology for pollution control. It also will create up to 50 new full-time jobs, according to the company, which is celebrating 50 years in business this year.

“As we celebrate 50 years of responsible aluminum recycling [in September], we’re looking toward the future and the opportunity to improve recycling in Minnesota,” Spectro Alloys President Luke Palen says.

Aluminum billet is used as raw material for extruders, who turn it into products that include railings, window and door trim; structural components for cars, boats, airplanes, trailers, docks; and more.

The company also plans to recycle used beverage cans (UBCs) and other end-of-life aluminum products to produce sheet ingots, which are high-purity slabs of aluminum weighing up to 60,000 pounds each that are used as feedstock for rolling mills.

Spectro Alloys says only 45 percent of aluminum UBCs are recycled currently in Minnesota, according to data from the Minnesota Pollution Control Agency.

The company's recycling process uses 95 percent less energy and releases 95 percent less CO₂ emissions than aluminum production using virgin raw materials. With this expansion, the company says it will save enough energy to power every home in Minneapolis and St. Paul combined.

“This investment isn’t just about adding jobs and producing more, it’s about helping Minnesota as a whole become better at recycling by creating an extremely valuable type of aluminum that manufacturers need,” Palen says. “It is about closing the loop for locally sourced materials—ensuring the value in aluminum products we use every day supports responsible recycling of aluminum right here in Minnesota.”

The billet project is the latest of several investments that Spectro Alloys has made recently. The company debuted a 70,000-square-foot distribution center for shipping and processing finished products late last year in addition to adding air filtration and pollution control system upgrades and a new business office and internal facilities for its team of 140 employees.

Metals

LME announces changes to closing price methodology

The London Metal Exchange (LME) has announced its plans for a phased introduction of an evolved closing price methodology to some of its trading contracts. The change, which seems to weigh in favor of larger transactions made at the end of each day, eventually will affect how the closing price is determined for aluminum, lead, copper, zinc and nickel.

Calling trade in those five nonferrous metals “its most liquid contracts,” the LME says the pending change in pricing methodology is designed to bring more determinism, transparency and standardization to closing price discovery.

“Our pricing evolution journey began in 2021 when we adopted the current approach of discovering our lunchtime official prices (used mainly by the physical industry) in the LME Ring and our afternoon closing prices [used more by financial participants] on our electronic LMEselect platform,” says Matthew Chamberlain, CEO of the LME. “This division has worked well and allows us to further evolve our closing price methodology—a key request from many of our financial market users—while maintaining Ring-based official price discovery.

“We will now be phasing in the implementation from January 2024 to ensure participants have adequate time to prepare for the changes,” he adds.

Aluminum and lead closing prices will be determined with the new methodology starting Jan. 22, 2024, while copper, zinc and nickel will follow March 18, 2024.

The LME says the volume-weighted average price (VWAP) methodology to be phased in will calculate the average price of trades over the five-minute pricing window according to the volume of contracts traded. Therefore, the closing price will represent the trades that take place over the pricing window, with each trade’s influence being proportionate to its size.

Additionally, if a five-lot minimum volume requirement (MVR) is not met, the price will be calculated using a time-weighted average price (TWAP).

As the LME has gathered information and surveyed stakeholders to make changes to its contract offerings, nonferrous recyclers hedging metals pricing regularly have urged the LME to consider the needs of physical traders as well as financial players.

Much of that concern involves any switch from the current contingent variation model (CVM) for traders taking a hedging position to a realized variation model (RVM), which is widely used in other trading exchanges.

“For the most part, I don’t know too many people in the trade, the physical market, who want to deal with RVM and settlements on a daily basis,” Mark Sellier, president of Hong Kong-based Global Metals Network, said at a Bureau of International Recycling (BIR) online session in 2021.

In mid-September, veteran trader and BIR volunteer Michael Lion tells Recycling Today, “The [closing price] calculation basis being proposed of itself should not necessarily have significant implications for scrap hedgers.”

However, a change in one methodology to stimulate financial sector involvement could lead to others.

“The underlying concern would be if this subsequently extrapolates into reconsideration by the LME of possibly again visiting the proposal raised in their 2021 discussion paper of changing margin requirements on the LME to [the] RVM methodology,” Lion adds.

Lion says independent and medium- sized firms remain wary. “A change to that methodology could significantly detrimentally impact the recycling industry in respect of recycling hedgers’ ability to obtain vital credit lines from LME brokers to fund the volatile price changes that can impact hedge positions that protect the hedger’s underlying physical metals position,” he adds.

In a news release, LME says, “A number of respondents to the consultation noted their desire for trade-at-settlement [TAS] contracts to be implemented alongside the VWAP methodology. While TAS is not, in the LME’s view, a prerequisite for the new methodology, the LME plans to introduce TAS functionality for three-month contracts alongside the launch of its new trading platform in 2024 and will continue to review the possibility of further expanding this functionality.”

In its 2021 discussion paper, the LME characterizes TAS as providing “increased transparency of the pricing methodology.” However, it adds, “The competitive position of Category 1 members may be impacted by the move away from the Ring, which could change the nature of the relationship between Category 1 members, other market participants and the LME itself.”

Paper

Pratt Industries opens Kentucky operations

Pratt Industries has opened its 100 percent-recycled paper mill and corrugated box factory in Henderson, Kentucky, marking the Conyers, Georgia-based company’s sixth recycled paper mill in the United States.

The initial investment in the 1.1 million-square-foot campus was $500 million but, in a news release announcing the opening, Pratt reports the final cost of the Henderson site at about $700 million.

The company has built six of its last eight paper mills in the U.S. Its other five U.S. mills are in Conyers; New York City; Shreveport, Louisiana; Valparaiso, Indiana; and Wapakoneta, Ohio. All six of its mills produce 100 percent-recycled paper.

The paper machine at the Henderson mill can produce up to 1,500 tons of recycled paper daily that will be used to make corrugated boxes at the company’s converting plants, including the box factory co-located with the Henderson mill.

Construction on the Henderson site began in March 2022, and the corrugator facility is expected to be completed by the end of 2026.

The company also plans to invest $120 million to build a new 496,000-square-foot box factory in Warner Robins, Georgia, that will manufacture corrugated boxes primarily from containerboard sourced from its mill in Conyers.

The factory is expected to create more than 125 jobs and will be Pratt’s 13th facility in Georgia. The company anticipates operations at the Warner Robins site to begin late next year.