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China’s ‘Green Fence’ benefits Aleris

Nov 06, 2013 | 04:00 PM |

Tags  Aleris International, China crackdown, Operation Green Fence, Steven Demetriou, automotive alloy, aluminum alloy, London Metal Exchange, scrap Nathan Laliberte

NEW YORK — China’s crackdown on imports of hazardous raw materials, dubbed Operation Green Fence, has spurred Aleris International Inc. to create a platform for processing low-grade scrap in the United States, the company said during a Nov. 6 earnings call.

"In the third quarter our spreads benefited from Operation Green Fence," Aleris chairman and chief executive officer Steven J. Demetriou said, adding that availability of lower-quality scrap products had improved since the initiative began in March. "We have installed new scrap processing equipment, which will allow us to process lower-quality scrap products."

The company’s Recycling and Specification Alloys North America segment posted adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) of $15.7 million in the third quarter, up 70.7 percent from $9.2 million a year earlier.

Segment income was positively affected by a 2.4-percent increase in overall volumes to 216,100 tonnes, driven primarily by demand for specification alloys from the domestic auto industry.

Additionally, the segment benefitted from productivity gains related to furnace and scrap optimization, which more than offset inflation, according to Cleveland-based Aleris.

The primary aluminum cash contract on the London Metal Exchange ended the official session Nov. 6 at $1,784.50 per tonne (80.9 cents per pound), down 5.4 percent from $1,887 per tonne (85.6 cents per pound) on the same day last year.

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