CHICAGO Alcoa Inc. remains optimistic about
prospects for its end markets, revising growth expectations
upward for the automotive sector despite low aluminum
Alcoa boosted its production forecast for the U.S. automotive
market as new vehicle sales continued to be strong through
June, pushing inventories down and prompting U.S. automakers
to scale back seasonal summer plant shutdowns, Alcoa chairman
and chief executive officer Klaus Kleinfeld said during the
company earnings conference call July 8, stressing gains by
aluminum, especially in passenger vehicle bodies.
Alcoa revised its North America automotive production growth
forecast up to between 2 and 5 percent for 2013 vs. 2012
from zero to 4 percent previously.
Aluminum is moving from luxury vehicles into higher-volume,
mass-production cars and trucks, a trend that opens up
enormous opportunities, Kleinfeld said. Aluminum body
sheet content per vehicle in North America, for example, is
expected to increase from 14 pounds in 2012 to more than 55
pounds by 2015 and to surge to 136 pounds by 2025, he said.
We are talking 1 million tonnes (in additional demand)
from auto sheet alone.
Alcoa is also bullish on the North American commercial
building and construction markets, Kleinfeld said, suggesting
that the sector is really picking up.
On the aerospace front, Alcoa continues to expect 9 to 10
percent sales growth in 2013 as major airline producers
Boeing Co., Chicago, and Toulouse, France-based Airbus SAS
have seen their backlogs grow to 8,900 planes, or eight years
of production, Kleinfeld said.
Long aircraft backlogs are also translating into more than
1,000 orders for new engines from companies like Pratt &
Whitney Corp., East Hartford, Conn., and General Electric
Co., Fairfield, Conn., he said, adding that even the
struggling regional jet market is
The only uncertainty we have in the aerospace market
these days is the defense side. Everything else is really
pointing in the right direction, meaning up, Kleinfeld
said. Alcoa is also seeing gains on carbon fiber reinforced
polymer aircraft, which do not use aluminum skin,
thanks to next-generation fastening systems, castings and
coatings, he said.
But the outlook for other end markets was more moderated,
Alcoa expects a weaker market for industrial gas turbines in
the second half of 2013, Kleinfeld said. That sector has been
hurt in Europe by lower-priced coal and
subsidized renewables while in the United States
higher gas prices have enabled coal to claw back
some market share it had lost, he said. Still, turbine
utilization is up, which means increased demand for
replacement parts if not for new turbines, Kleinfeld
In addition, Alcoa has narrowed its forecasted production
decline in the heavy truck and trailer sector to 9 to 13
percent from 15 to 19 percent previously, Kleinfeld said. But
while orders are up year-over-year and inventories down,
stocks still remain higher than historical norms, he
And in the North American beverage can and packaging sector,
Alcoa now expects a year-over-year sales decline of 2 to 3
percent in 2013 compared to previous expectations of a
roughly flat market in part because the region
struggled in May, he said.