Unprocessed used beverage cans (UBCs) could affect the price of aluminum scrap.
COVID-19-related lockdowns created a glut of unprocessed UBCs across the US, but now that states like Michigan are reopening, along with their curbside recycling programs, the sudden glut at redemption centers could put downward pressure on prices in the aluminum scrap market—especially if residents have held onto scrap instead of letting it flow through the system, a market participant told Davis Index.
The Aluminum Association has estimated that material from beverage container deposit systems, which were deemed essential by the federal government during the shutdown, account for 20-60pc of the packaging material used by the beverage industry. Moreover, the higher recycling quality of these materials require very little sorting and can be quickly adapted to manufacture new cans.
States like Michigan and Oregon use these programs to recycle UBCs, and under their redemption programs, consumers can deposit used beverage containers for 10¢ at supermarkets. These containers are then picked up by liquor and soft beverage companies through the container deposit system and sold to scrap yards for processing.
However, during the shutdowns, Michigan was the only state suspend its redemption program, and Michiganders are now consequently stuck with around $50mn worth of recyclable beverage cans and bottles, according to a media report.
The redemption system moratorium has led to an estimated 70mn unredeemed cans and bottles a week, a Michigan-based scrap recycler, which processes UBCs from Michigan’s beer and soft beverage distributors, told local media.
Oregon, however, used a different approach that seems to have worked well under the circumstances. The state’s Liquor Control Commission paused the enforcement of redemption requirements for UBC and other beverage containers for the duration of the shutdowns, but they will resume as each county reopens individually. However, this, too, could create an surplus of UBCs, especially if two or more counties reopen together, according to market participants.