CHICAGO Novelis Inc. sees
additional automotive aluminum sheet finishing capacity as
necessary in the United States despite announced expansions
from competitors, president and chief executive officer Philip
Novelis expects to see a
compound annual growth rate of about 25 percent for automotive
aluminum between 2012 and 2017 as the material becomes the
"clear metal of choice" to help automakers meet fuel economy
requirements, he said during a conference call on the
companys earnings results.
Pittsburgh-based Alcoa Inc. has
announced plans to invest $275 million over the next three
years to boost aluminum sheet capacity at its rolling mill in
Alcoa, Tenn. The aluminum producer has also announced a
$300-million expansion at its operations in Davenport, Iowa,
which is expected to be complete by the end of 2013. The
company has said the expansion at Davenport wont be
enough to keep up with forecast demand from the automotive
amm.com, May 2).
"The announcement from Alcoa
signifies the solidification of the market dynamics that are
very positive for automotive aluminum sheet in the United
States," Martens said.
Atlanta-based Novelis is
investing $200 million to expand its operations in Oswego, N.Y.
amm.com, Oct. 31). The company has made "quite a
bit of progress" on its two finishing lines in Oswego and
expects to begin commissioning this summer, Martens said.
Commercially viable sheet wont roll off the lines until
the fourth quarter, but both lines are "largely subscribed"
from end-users, he said.
Most of the capacity from the
finishing lines will be used for 2015 model vehicles in North
America, which means their impact on financial results will be
felt more substantially in fiscal 2015, Martens said.
Novelis could add new
heat-treatment capacity in about two years if necessary,
Martens said. Given the relatively short time necessary for
heat-treat expansions, Novelis can confirm and complete new
contracts before going ahead with additional heat-treat
projects, he added.
"We have the ability to contract
first, look at the best location for that (capacity) and then
install the capacity if its required. But I do anticipate
that we will require more heat-treatment capacity in the United
States," Martens said.
Also on the automotive front,
Novelis has seen strong demand for its products from its
facilities in Europe, in part because most of the aluminum
Novelis produces for the automotive sector goes into vehicles
that are sold worldwide, he said.
Novelis has also seen strong
results for can stock in Europe, driven by material
substitution, Martens said. However, demand for products used
in the European construction sector have taken a hit as the
regions building and infrastructure markets have
suffered. That negative impact has been felt mostly by
Novelis Italian facilities in Bresso and Pieve, he