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The economics of secondary aluminium supply: An econometric analysis based on European data

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  • Blomberg, Jerry
  • Söderholm, Patrik

Abstract

The purpose of this paper is to analyze the economics of secondary aluminium supply in Western Europe. We derive a supply model of secondary aluminium recovery and recycling, which integrates microeconomic theory of production with a dynamic model of scrap generation and accumulation. The supply function contains the secondary output price, a vector of input prices, and a measure of the size of the stock of old aluminium scrap. The model is estimated using pooled cross-section and annual time-series data for four European countries, Germany, France, Italy and the United Kingdom, over the time period 1983–2000. The estimated own-price elasticity of secondary aluminium supply is low (0.21) as is the supply response to changes in the stock of old scrap. The empirical results are useful for analyzing market behavior and policy impacts in the secondary aluminium market. The low supply responses to changes in the output price can – in combination with the high-income elasticity of material demand – help explain the observed price volatility of secondary aluminium prices. They also suggest that price-based policies influencing the supply side of the market may only have limited impacts on aluminium recycling rates, and that national collection of aluminium scrap is likely to have small influences on secondary aluminium production internationally.

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  • Blomberg, Jerry & Söderholm, Patrik, 2009. "The economics of secondary aluminium supply: An econometric analysis based on European data," Resources, Conservation & Recycling, Elsevier, vol. 53(8), pages 455-463.
    • Handle: RePEc:eee:recore:v:53:y:2009:i:8:p:455-463
    DOI: 10.1016/j.resconrec.2009.03.001
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    References listed on IDEAS

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    1. Blomberg, Jerry & Hellmer, Stefan, 2000. "Short-run demand and supply elasticities in the West European market for secondary aluminium," Resources Policy, Elsevier, vol. 26(1), pages 39-50, March.
    2. Gomez, Fernando & Guzman, Juan Ignacio & Tilton, John E., 2007. "Copper recycling and scrap availability," Resources Policy, Elsevier, vol. 32(4), pages 183-190, December.
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    5. Slade, Margaret E., 1980. "The effects of higher energy prices and declining ore quality : Copper--aluminium substitution and recycling in the USA," Resources Policy, Elsevier, vol. 6(3), pages 223-239, September.
    6. Radetzki,Marian, 2008. "A Handbook of Primary Commodities in the Global Economy," Cambridge Books, Cambridge University Press, number 9780521880206, Junio.
    7. Slade, Margaret E., 1980. "An econometric model of the U.S. secondary copper industry: Recycling versus disposal," Journal of Environmental Economics and Management, Elsevier, vol. 7(2), pages 123-141, June.
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    Cited by:

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    5. Taichi Suzuki & Ichiro Daigo, 2024. "Recycled Content for Metals with Refined Classification of Metal Scrap: Micro-Level Circularity Indicator in Accordance with Macro-Level System," Sustainability, MDPI, vol. 16(16), pages 1-13, August.
    6. Sourabh, Shalinee & Pavithran, Sagar & Menon, Balagopal G. & Mahanty, Biswajit, 2023. "Econometric modeling for the influence of economic variables on secondary copper production in India," Resources Policy, Elsevier, vol. 86(PB).
    7. Zhang, Zhouyi & Song, Yi & Cheng, Jinhua & Zhang, Yijun, 2023. "Effects of heterogeneous ICT on critical metal supply: A differentiated perspective on primary and secondary supply," Resources Policy, Elsevier, vol. 83(C).
    8. Fu, Xinkai & Ueland, Stian M. & Olivetti, Elsa, 2017. "Econometric modeling of recycled copper supply," Resources, Conservation & Recycling, Elsevier, vol. 122(C), pages 219-226.
    9. Söderholm, Patrik, 2011. "Taxing virgin natural resources: Lessons from aggregates taxation in Europe," Resources, Conservation & Recycling, Elsevier, vol. 55(11), pages 911-922.
    10. Roberto Ercoli & Andrea Orlando & Daniele Borrini & Franco Tassi & Gabriele Bicocchi & Alberto Renzulli, 2021. "Hydrogen-Rich Gas Produced by the Chemical Neutralization of Reactive By-Products from the Screening Processes of the Secondary Aluminum Industry," Sustainability, MDPI, vol. 13(21), pages 1-17, November.
    11. Sevigné-Itoiz, Eva & Gasol, Carles M. & Rieradevall, Joan & Gabarrell, Xavier, 2014. "Environmental consequences of recycling aluminum old scrap in a global market," Resources, Conservation & Recycling, Elsevier, vol. 89(C), pages 94-103.

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