American aluminum demand and production are on the rise,
helping the domestic industry weather the global storms that
have slowed European and Chinese markets, industry leaders say.
Furthermore, its unique position within the recycling world
gives it additional advantages in the marketplace.
Preliminary estimates put total aluminum demand (shipments
by domestic producers plus imports) in the United States and
Canada at 7.68 billion pounds in the first four months of this
year, a 6.6-percent increase from the same period in 2011,
according to the latest available data from the Arlington,
Va.-based Aluminum Association, while apparent consumption
(demand minus exports) climbed 9.2 percent to 6.43 billion
pounds in the same comparison.
Because of aluminums low weight and durability,
people are turning to it for new and innovative
applications, said Heidi Brock, president of the Aluminum
Association. The North American aluminum industry is
growing to meet this demand.
Gains werent limited to year-over-year comparisons.
Production in March and April showed month-on-month increases
after slipping in January and February following two years of
continuous upward momentum. While most markets are
holding steady or beginning to look up, the key drivers are the
transportation and electrical sectors, Brock said.
Electrical wire and cable used in building applications and
electrical transmission increased 28.8 percent in the first
four months compared with a year earlier. Aluminums
high conductivity and low weight make it the material of choice
for power transmission lines, she said.
A Ducker Worldwide LLC report said that aluminums share
of the automotive material mix is expected to double to 16
percent by 2025. The transition to aluminum in the
automotive sector is being driven by efforts to increase fuel
efficiency, Brock said. Downweighting with aluminum
increases fuel efficiency and performance while maintaining the
highest level of safety.
The Aluminum Association numbers and Duckers analysis
were released in mid-June at around the same time as
AMMs second annual Aluminum Summit in New York,
where industry leaders said that slowdowns in European and
Chinese economic growth had not significantly dampened the U.S.
aluminum sector, which remains relatively robust in terms of
both physical demand and regional premiums despite weak London
Metal Exchange prices.
We touch a lot of the very basic markets in the United
States, and from our perspective we think our experience
supports the belief that there is strong demand in the
U.S., Layle K. Kip Smith, president and chief
executive officer of Noranda Aluminum Holding Corp., said in a
roundtable discussion at the AMM conference. My optimism
is founded first on the strength of our demand, Smith
said, citing a pickup in the Franklin, Tenn.-based aluminum
producers first-quarter results. Typically, we have
a seasonal uptick in demand. If anything, we saw the seasonal
uptick start sooner in our key market segments (in the United
Jean Simon, president and chief executive officer of primary
metals at Rio Tinto Alcan, agreed that the United States is a
particularly strong spot in the Montreal-based miners
global portfolio. The U.S. is quite resilient. ... If you
look at the last six months, the improvement to the growth in
the economy is much better than anybody might have
expected, he said. There are some signals it might
slow down a bit, but were still confident in the U.S.
economy. Growth will continue, but maybe at a slower
But while the U.S. market appears to be experiencing an
upswing in demandwhich, along with swelling warehouse
stocks, is contributing to a run-up in Midwest
premiumsthe overall aluminum price remains low.
What we have seen is quite positive. Demand is quite
strong, even if the price is not where wed like it to
be, Simon said.
Smith agreed. Im more optimistic about demand in
the U.S. than price, he said.
The lower aluminum price appears to be partly the result of
growing apprehension among investors, who today are less
confident in commodities compared with less risky
assets, such as the U.S. dollar, Simon said. (With) what
we have seen with the sovereign debt crisis in Europe and also
with the slowdown in China, this has (encouraged) the global
investment community to go less into the risky assets.
Weak physical demand in Europe and the soft landing
of the Chinese economy have not helped global sentiment either,
Nonetheless, Rio Tinto Alcan remains slightly upbeat in the
mid-term, even on a worldwide scale, Simon said.
Globally, if we look at the next six to 12 months we are
confident but cautious.
Oliver Bell, executive vice president of rolled products at
Oslo, Norway-based Norsk Hydro ASA, agreed, noting that while
aluminum demand has slowed in Europe, real buying is still
taking place. I believe the customer has worked down
their inventory to a level which is sustainable. So every order
thats coming is really fulfilling demand, he said.
In general, we have all reasons to be positive.
Bell told the conference that Norsk Hydro believes global
demand for flat-rolled products will grow at a compound annual
rate of 6 percent between 2012 and 2016 while flat-rolled
capacity will grow at an 8-percent rate. Global demand for
flat-rolled products will rise to around 25.4 million tons in
2016 from 20.1 million tons in 2012, with Chinese demand
accounting for nearly 3 million tonsor nearly 57
percentof the anticipated growth. Its
very clear that China is the driving force. If you deduct
China, its a little more moderatejust 4
percent, Bell said. Its all about
An increase in flat-rolled capacity will more than
compensate for the higher demand, Bell said. Hydro forecasts
that global flat-rolled capacity will rise to around 38.6
million tons in 2016 from some 28.2 million tons today, with
China accounting for some 8.1 million tons of flat-rolled
The United States aluminum industry produces about $40
billion in products, including exports, per year, according to
the Aluminum Association. Aluminum is one of the few products
and industries remaining in the United States that truly
impacts every community in the country, either through physical
plants and facilities, recycling, heavy industry or consumption
of consumer goods, Brock said, adding that in terms of
both its positive economic and environmental impact, the
aluminum industry remains one of our most significant national
and international success stories.
The U.S. aluminum industry is a great example of an
industry providing a positive economic impact while mitigating
negative environmental impacts, Charles Johnson, the
Aluminum Associations vice president for environment,
health and safety, testified in June before the House of
Representatives environment and the economy subcommittee
on a draft bill, The Increasing Manufacturing
Competitiveness Through Improved Recycling Act.
A more-robust understanding of the quantity of
materials in the solid waste stream provides industry and
policymakers with the most appropriate data to develop
solutions to increasing the U.S. recycling rate, Johnson
said of the proposed legislation, which would facilitate the
collection of better waste and recycling data. There are
many proposed solutions to increasing recycling in America, but
industry and policymakers need data to best understand which
method is best.
Johnson said that the U.S. aluminum industry believes
recycling is a source of sustainable, private-sector-driven
green jobs; that recycling is a vital part of energy efficiency
and should be part of the United States energy solutions;
that the collection of better waste and recycling data will
allow consumers, policymakers and the industry to more rapidly
achieve a higher recycling rate; and that increasing recycling
will further benefit the industry, improve sustainability,
contribute to the countrys energy efficiency goals,
decrease solid waste in landfills, and create jobs.
In 2010, Americans recycled $1.6 billion in aluminum
cans. If the industrys beverage can recycling goal of 75
percent was achieved, the payback to American consumers would
be $2.1 billion, Johnson said. Aluminums
infinitely recyclable nature means scrap metal has high value,
and the processing and recycling of the metal yields a
significant impact on the economy and in job creation. Because
aluminum recycling saves energy, recycling jobs are green
Marketing trends are leading all recycling industries to
take more recycled materials, but the material is not always
available, he said, adding that the U.S. public demands more
environmentally responsible solutions. Walmart, Target and many
other retailers are demanding increasingly sustainable
packaging that has significantly less impact on the
environment. Those demands are part of a larger shift in
consumer preferences that is becoming as important to industry
as access to raw materials, Johnson said.
In 2009, 87 percent of the energy consumed by the
North American aluminum industry was offset by energy savings
achieved through the use of aluminum to make automobiles and
light trucks more fuel efficient, he said.
Similarly, in 2009 92 percent of the aluminum
industrys cumulative greenhouse gas (GHG) emissions could
be considered to be offset by GHG emission reductions achieved
by increasing aluminum content in the transport sector.
Automotive aluminum represents only 26 percent of North
American sector shipments. Aluminums use in other
sectors, including building and construction, consumer
durables, electrical wiring and packaging, imparts greater
energy and emissions saving through the materials
use-phase and helps to neutralize industrial energy usage and
Johnson also said:
The metallic, elemental nature of aluminum means that
it is infinitely recyclable. It can be recycled over and over
with no loss of quality. In fact, 75 percent of all aluminum
produced since 1888 is still in use today. Recycling aluminum
saves 95 percent of the energy associated with primary aluminum
production and emits only 5 percent of the greenhouse
Aluminum recycling provides a massive opportunity for
energy efficiency. The recycling of one aluminum can saves
enough energy to power a 100-watt light bulb for four hours. In
the aluminum industry, recycling directly translates to energy
savings. The metal in a beverage container can be thought of as
solid energy; recycling saves that energy each time it is
reused instead of sending it to a landfill.
In the simplest form, the business case for
increasing aluminum recycling is based on the fact that
increasing recycling will increase energy efficiency. The
aluminum industrys position in favor of recycling is not
greenwashingits green business.
Over the past 20 years, the North American industry
has lowered energy usage 17 percent and greenhouse gas
emissions 42 percent related to primary production. During the
same period, recycling energy requirements and greenhouse gas
emissions have gone down about 60 percent.
Based on our interactions with recycling experts,
waste haulers and municipal recycling facilities, we know that
better information leads to more-efficient recycling that
maximizes environmental gain and material efficiency while
minimizing collection and reclamation costs, Johnson
said. The most widely recognized application for aluminum
is the beverage can. The can is the most recycled beverage
container in America. In an average aluminum can, 68 percent is
recycled content, the highest amount of any beverage container.
The metals infinite recyclability and high value means a
beverage container goes from recycling bin and back to store
shelves in less than 60 days.
The aluminum industry has set itself a goal of reaching a
75-percent aluminum can recycling rate by 2015, Johnson said.
We are engaged in various initiatives, including
establishing and funding a new organization called the Curbside
Value Partnership with other material manufacturing
organizations and makers of packaging products. Curbside Value
Partnership works with municipalities to increase consumer
participation in existing recycling programs. Our evaluation of
the program indicates that it routinely results in a 17-percent
increase in household participation, translating into a
22-percent increase in tons of recycled materials. Data
generation and analysis, a requirement that must be carried out
as part of the program, is a key to that success. Cities must
implement a tracking system to better understand what material
is coming back and (is) reintroduced into a new, useful
A robust materials tracking and data-gathering system is
necessary due to the complexities of material recycling value
chains, Johnson said. For example, differences in material
weights and scrap values complicate consumer behavior choices.
Aluminums high strength and low weight, as well as its
corrosion resistance, allow for an increasing range of use.
Measuring recycling by commingled weight undercuts the full
benefit of aluminum recycling to the environment and its
subsidizing role in most curbside programs.
The aluminum industry is committed to increasing
recycling because an increased recycling rate is good for
business and good for the environment. Recycling is key to the
sustainability of the aluminum industry in an economic and
environmental context. Recycling efficiencies should also be a
key consideration in our countrys energy strategy,
Johnson said. For these reasons, the aluminum industry is
ready to work with (the Environmental Protection Agency) to
improve our understanding of the waste and recycling