ISLE OF PALMS, S.C.
Bolstered by automotive and aerospace demand, Alcoa Inc.
expects aluminum demand to grow 6.5 percent over the next
decade, outstripping global gross domestic product gains,
according to executive vice president and chief financial
officer William Oplinger.
In fact, Pittsburgh-based Alcoa
thinks supply and demand will be tighter than the 535,000-tonne
surplus the company estimated just three months ago, Oplinger
said April 9 at the Aluminum Associations spring meeting
in Isle of Palms, S.C.
While Oplinger conceded that
such a projection was "going against the tide," he insisted
that it makes sense, assuming 7-percent demand growth in 2013;
China taking capacity offline, which should benefit upstream
aluminum producers elsewhere; and strong automotive and
"This is a growth industry,"
Oplinger said. "When you hear a lot of the bad press about our
industry not growing quickly enough and applications not being
innovative enough, I think its fundamentally wrong."
Driving aluminums expected
growth are macro-trends such as the world population
approaching 9 billion, urbanizationwhich bolsters demand
for cars, housing and packaging, all of which contain
aluminumand climate change, which should benefit the
aluminum industry as automakers look to lightweight their
vehicles to reduce emissions, Oplinger said.
He brushed off some conference
attendees concerns about exports from China. "When you
think about exporting metal out of China, you are essentially
exporting energy, which they are short on; water, which they
are short on; and carbon emissions, which they have too much
ofso we dont foresee them being large exporters
anytime in the near future," Oplinger said.
The manufacturing of
aluminum-intensive vehicles is set to ramp up significantly in
coming years, Oplinger said (
amm.com, April 9), noting that Alcoa is planning
to accommodate an expected 10-fold increase in aluminum sheet
requirements in the auto sector.
Alcoa expects aluminum
penetration in vehicles to increase by 200 pounds in coming
years, driving 1.5 million tonnes of additional demand in North
America. Oplinger noted that there are relatively few North
American primary aluminum producers, estimating current North
American primary aluminum capacity at slightly more than 1
In addition, the aerospace
sector has an eight-year backlog at current run rates, Oplinger
said, and even demand from building and construction in North
American is improving. "We are starting to see the green shoots
come back," he said,
But there are some headwinds,
Oplinger said, acknowledging that aluminum is facing challenges
from carbon fiber in the aerospace sector, although Alcoa has
been "very aggressive" in developing aluminum-lithium alloys,
which he said compete well against carbon fiber.
Alcoa expects aluminum-lithium
demand to grow fourfold "over the next few years," Oplinger
said. The company currently makes all of its aluminum-lithium
alloys at its technical center near Pittsburgh, but it is
investing in a casthouse in Lafayette, Ind., that is expected
to come online at the beginning of 2014 (
amm.com, May 17).
Oplinger said the aluminum
industry isnt doing enough to get its positive message
out to Main Street, Wall Street or Capitol Hill. Issuing a
"call to arms," he said Alcoa would like to see more
congressional visits from the industry, the creation of an
aluminum caucus and a bigger push to improve communications
about aluminums advantages, especially when it comes to
sustainability. "We are significantly outperformed by things
like steel, paper, plastic and glass," he said.
One other big challenge is price
volatility on the London Metal Exchange, which comes often in
reaction to even limited news, Oplinger said. "Were
working to get better transparency around the LME so people can
see who the big players in the LME are."