Producers, processors and providers of scrap have a dog in the fight over whether steel or aluminum is the "material of choice" for lightweighting vehicles, as well as how current economic conditions might affect future scrap sales.
The steel and aluminum industries continue to debate the transition to lightweight metals, with the focus drawn toward fuel efficiency standards for cars, which the U.S. Environmental Protection Agency (EPA) would like to average as much as 62 miles per gallon (mpg) by 2025. Movement to lightweighting will certainly have an impact on the scrap supply chain.
"The days of looking solely at tailpipe emissions are over," Doug Rife, marketing manager at Nucor Corp., Charlotte, N.C., told delegates at AMM's Automotive Metals Conference in Atlanta. "You've got to do lifecycle assessment. You have to look at the process from cradle to grave."
Even with the lightweighting trend, the scrap industry is going to have issues to contend with. Combining import growth, 15 percent less content and 2 to 3 percent lower domestic parts production means that during "this coming decade the volume of material made in North America to build an automobile will fall by 20 percent compared with the prior decade," Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc., Richmond Hill, Ontario, said at the Metals Service Center Institute's Economic Forecast Summit in Chicago. "Have you accepted lower demand and put that in your forecast?"
But he assured delegates that their world won't end. If scrappage remains at an annual rate of 5 to 5.5 percent of the 280 million vehicles on the road in the United States, that amounts to 14 million vehicles per year that need to be replaced, while annual average growth of 0.8 to 0.9 percent in the driving-age population in North America will generate demand for another 1 million to 1.5 million vehicles.
As to the lightweighting issue, one of the keys to getting there lies in mass reduction, which the steel industry has been working to achieve for years. Larry Kavanagh, president of the Steel Market Development Institute, a division of the American Iron and Steel Institute, said that gains in the use of advanced high-strength steels continue to aid lightweighting efforts and thus improve fuel efficiency.
Randall Scheps, chairman of the Aluminum Transportation Group and director of ground transportation at Pittsburgh-based Alcoa Inc., said the best way to reduce vehicle weight and thus reduce emissions is with the use of lighter-weight material, principally aluminum in place of steel where possible.
A study by the University of Aachen in Germany showed that the use of aluminum saves more weight in vehicles than the use of high-strength steels—a 40-percent maximum reduction in a vehicle body-in-white using aluminum vs. an 11-percent weight reduction using high-strength steels, Scheps said. "We don't think steel is the answer for saving the most weight."