Market Research : Aluminium

Aluminium the new steel ? 

        SET Project wants to enforce the use of a circular economy. Thus, aluminium has great recycling aspects, since after being recycled it doesn't lose its material properties. Also, this means that we can give a new meaning to wastage. As I was discussing about aluminium usage for vessels it was noted that wastage stands at about 20% in the ship building process. This 20% can provide for new capital, and the use of wastage can reduce the carbon footprint per kilo of Aluminium produced.
Why recycling wastage is important is because the creation process uses a lot of energy. You must first extract Bauxite which contains approximately 20% of Alumina (= aluminium oxide). Then that 20% of Alumina is extracted from bauxite in a refinery. And finally, to create Aluminium you need an energy extensive process which uses a lot of electricity. Of course, the creation process is slightly more complex, but I will keep it simple. 
Once Aluminium is created, you can recycle it and this only takes 5% of the energy used in the creation process. 

        In the shipbuilding industry, you will find Aluminium 5083. It has good resistance, it's easy to work with, and there's a reduction of 30% for weight versus steel. Additionally, the term often used will be : Aluminium alloy. This means there was an enhancement of Aluminium properties for specific features in which : light weight and corrosion resistance are important.  
 This is very important since Aluminium 5083 has great corrosion resistance in a pH of 5 to 9 (graph 3) and the ocean is at an average pH of 8.1. Additionally, it is important to note that these values will change due to the decreasing evolution of the environment.
On the pricing side, Aluminium has increased. This wasn't a shock to me since labor costs, taxes and product norms for environmental purposes have escalated. However, there may be a reduction in production of Aluminium, so prices may rise more. At the moment, Aluminium (not alloy) is noted to cost around $2,810.50/t (Graph 1). The peak price was in October 2021 hitting the all time high (in 5 years) of approximately $3,200/t. From March 2020 ($1,500) to October 2021($3,200/t), we can see an increase of $1,700 in Aluminium. That is a notable rise.
Now, what I am wondering is, since Aluminium is noted to be the new transitory material for shipbuilding, will it converge back to the $1,900- $2,000/t as in 2017/20 ? 
    If we compare to its big brother : Steel, we can see that cost per tonne is below the $1,000/t mark ever since it is used. However, Steel does not provide light weight and is a difficult material to work with. This means we will see a substantial need of labor force and cost in the overall production time. Plus, the recycle value is not as important. Nonetheless, steel has much better resistance, which is also called abrasion resistance which means it has the ability to withstand rubbing, scraping...


       Finally, I've learned that if you want to know the budgeting price for building a ship you need a design and know the specific environmental constraints it will meet... And the costs are actually to last thing on the list. But it is important to see how cost, demands, offers of materials, labor etc. are evolving.

  I am a firm believer that Aluminium alloy will become the new material for trading ships since it is now becoming "normal" to reduce fuel consumption, think about the environment and live in harmony with the ecosystem. I recommend reading the "Limits of Growth" by Meadows and Randers. It will give you the grim reality in which we live in and how "fast consumption" is destroying our ecosystem. It is time to evolve towards a durable and collective future in which sustainability is key to our well being. If we want a better future, it is our choice and responsibility to do it. 

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