NEW YORK The
aluminum industry will need more hot mills in order to meet
demand growth, especially from the automotive sector, according
to industry executives at AMMs Aluminum Summit
in New York.
Inc. has doubled its mill structure in South America and Asia
and will leverage that capacity initially, Brad Soultz, vice
president and chief strategy and commercial officer, told
AMM on the sidelines of the conference. "Clearly, to
grow this company from a 3-million-tonne system to a
6-million-tonne system, well be talking about more hot
mills. But there is nothing definitive other than the
(expansions) we have publicly disclosed."
He declined to specify
in what regions the new capacity might be added.
Soultz noted during
prepared remarks that aluminum in the automotive sector is
expected to grow dramatically around the world over the next 20
years. "We need to stay ahead of the OEMs (original equipment
manufacturers)," he said. "This is real, and it is big."
The average North
American automobile weighed about 3,800 pounds, including
roughly 350 pounds of aluminumaround 9 percentin
2012, Soultz said. By 2025, the average vehicle will weigh
3,400 pounds, of which 550 pounds (16 percent) will be
"Aluminum is not going
to take over the entire industry, but its certainly going
to be substantial and were certainly investing to get
there," Soultz said, noting that the growth in aluminum comes
not only from more-stringent fuel economy standards but also
from consumers who increasingly prefer the light metal.
Consumers like large vehicles with comforts, safety features
and navigation systems and other conveniences, which also makes
the weight-saving offered by aluminum necessary, he said.
The next big step in
aluminums penetration into cars and trucks is the
conversion of automotive bodies from steel, said Randall
Scheps, director of global automotive marketing for Alcoa
Global Rolled Products. "We are really right on the edge of
that beginning to happen," he said, citing gains already made
by aluminum in automotive applications as diverse as heat
exchangers, wheels, engine blocks and hoods.
Cars and trucks also
are using more high-strength steels, Scheps conceded, but those
gains are generally coming at the expense of mild steels rather
than aluminum. "Steel is essentially taking share from itself,"
he said. "Yes, they are selling more high-strength steel, but
they are losing 2 pounds of mild steel for every pound of
high-strength steel that they sell. They are reaching the end
of the amount of weight savings they can bring to the
Scheps brushed off the
idea that aluminum might be threatened by competition from
composites, noting that automakers can use the same equipment
to process both steel and aluminum. "The capital required to
make this change (to aluminum) is not huge. ... But to go to
composites, or do something crazy and radical, you would have
to take some very large equipment and throw it out and replace
it," he said.
Inc. has already "doubled down" on its auto sheet business in
North America, Scheps said, noting that recent expansions at
its facilities in Davenport, Iowa, and Knoxville, Tenn., were
largely secured by signed contracts. "This is not Alcoa going
out and guessing this is going to happen," he said. "This is us
working very closely with the carmakers to support programs
that are already on the board."
But as aluminum
companies look to boost their participation in the automotive
sector, they also must keep a close eye on costs, said Laurent
Musy, Paris-based Constellium NVs president of packaging
and automotive rolled products. The canstock market, for
example, is demanding but also standardized, a trend that could
play out in the automotive sector as well, he said. "We may see
a global trend of, on the one hand, very sophisticated and
tailor-made solutions and, on the other hand, some type of
standardization to bring cost down for the bulk market."
In addition to
boosting capacity and lowering costs, the aluminum industry
must work more closely with automotive companies, said Kevin
Moore, president of East Lansing, Mich.-based All Raw Materials
Consulting LLC and a former executive at Detroit-based General
Motors Co. "Youd better get in bed with our design
engineers," he said. "The steel engineers were in our design
rooms solving problems, best friends, and made us comfortable.
Its a big investment (with) big risk but big gains.
Its one thing youve got to do."