UBC recovery losses draw scrutiny as remelters move to metal-unit settlement

Two North American rolling-mill groups have moved used beverage can purchasing onto a recovered-metal settlement basis, paying suppliers on assayed aluminium units delivered out of the delacquering and melting process rather than on inbound bale weight.

The change is procedural rather than dramatic, but its effect on supplier economics is immediate. Under weight-based settlement, a bale carrying excess moisture, residual liquid, dirt or non-can aluminium is paid for at full rate. Under metal-unit settlement, all of that becomes a deduction.

Suppliers contacted by RecyclerWorld reported settlement outcomes ranging from broadly neutral to five percentage points below their expected yield.

Where the metal goes

UBC yield loss has three main components, and operators tend to underestimate all of them.

Moisture. Cans collected through deposit systems and curbside streams arrive with residual beverage, and bales stored outdoors take on water. Moisture is dead weight that is paid for on the way in and vanishes in the furnace.

Coating and organics burn-off. Beverage can bodies and ends carry lacquer, ink and lubricant. Delacquering removes it before melting, and that mass is not aluminium. This is a known, roughly predictable loss, but it is a loss.

Non-target material. Aerosol cans, foil, non-can aluminium and outright trash all reduce recovered units. Several remelters have begun reporting composition audits back to suppliers alongside settlement, which is itself a change.

“We knew our number was somewhere around ninety-two percent and it turned out to be closer to eighty-eight,” said Warren Teale, general manager at Brightwater Recovery, which supplies UBC from three transfer sites. “That four points is the whole margin on the account. We did not have a quality problem, we had a measurement problem, and the measurement just moved to their side of the scale.”

The operational response

Suppliers who have adapted quickly have done so with unglamorous changes. Covered bale storage rather than yard stacking. Shorter dwell between baling and shipment. Tighter inbound screening at the tipping floor to catch aerosols and foil before they reach the baler.

One processor said it had reworked its bale density target downward, on the theory that extremely dense bales trap moisture and complicate delacquering. Another has begun sampling and drying bale cores to establish its own moisture number before shipping, so that settlement disputes start from data rather than assertion.

“The mills are not being unreasonable. They are paying for aluminium and they always were. The difference is that now they can see exactly what they bought, and so can we.”

The wider read

Metal-unit settlement is standard practice in much of the secondary aluminium trade and in most nonferrous furnace relationships. Its arrival in UBC is a sign of a market where remelt capacity is competing hard for units and can afford to be precise about what it is buying.

It also rewards scale and capital. A supplier with covered storage, a moisture programme and its own assay capability can defend a number. A smaller yard shipping a few loads a month will take the deduction and have limited ability to argue.

Expect the practice to spread. At least one other group is understood to be reviewing its UBC purchasing terms for the 2027 contract round.