NEW YORK As demand for automotive sheet continues to grow, aluminum manufacturers will need to meet rising capacity requirements through aggressive investment in new facilities and updated manufacturing processes, Novelis Inc. senior vice president and president of Novelis North America Marco Palmieri said at the commissioning of the companys aluminum automotive sheet finishing lines in Oswego, N.Y.
"We definitely see growth in automotive sheet demand," Palmieri told AMM Oct. 24. "These two lines are not the end, they are the beginning of our investment in this area, and we are already looking for additional investments."
Palmieri said the two automotive sheet lines at Oswego are almost fully contracted and that the Atlanta-based company has invested globally to boost its automotive finishing capabilities (amm.com, Oct. 16). In addition to the Oswego expansion, a new plant is under construction in Changzhou, China, that is expected to commence production in mid-2014 and will have annual capacity of 120,000 tons, he said. The company also recently certified automotive production at its Göttingen, Germany, plant that will add approximately 40,000 tons of capacity.
"At this stage, we are doing our homework to develop the proper business," Palmieri told AMM. "We have to invest more to continue growing; the demand is there, no question."
But new challenges will emerge with demand for automotive sheet spiking, namely with availability of scrap, Palmieri said.
"Today, in the U.S., I think the big challenge is how to make the final consumer recycle more," he said, noting that Novelis intends to utilize 80 percent scrap in its production of aluminum products. "I think we as an industrynot just Novelis, the aluminum industry, the can makershave to find creative ways to motivate the final consumer to recycle a beverage can. The aluminum industry has to do a much better job with this. I dont think we have done that in the past."
The landscape is made even more challenging by a myriad of competitors, each looking to gain market share in the used beverage can (UBC) market, he said.
"There are a number of competitors in the marketplace," he said. "But what Novelis has is a differentiation in worldwide capability to buy and move scrap around. We have facilities in Korea, facilities in Europe, in the United States, and in South America. We have the flexibility to move UBCs around and we do that. We have a good advantage in the market because we can move UBCs from place to place."
Palmieri also addressed a growing concern among industry insiders that with rising aluminum prices, consumers may look for lower cost alternatives like steel.
"We have hedge mechanisms, all the financial tools in place to smooth variation in price," he said, adding that Novelis does not have any immediate plans to utilize the Chicago Mercantile Exchanges proposed aluminum contract (amm.com, Oct. 10) . "We work with the (London Metal Exchange) as a reference point and thats it. We know that if the aluminum price goes up, the other materials will also go up somehow."