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Kaiser still mulling automotive sheet

Keywords: Tags  Kaiser Aluminum, Jack Hockema, Trentwood plant, aerospace, plate, aluminum lithium, automotive, extrusion aluminum sheet

CHICAGO — Kaiser Aluminum Corp. hasn’t ruled out expanding into automotive sheet, but don’t expect an announcement soon, the company’s top executive said.

"At this point, we have not made a decision to go there. But it doesn’t mean that we won’t go there," Kaiser chairman, president and chief executive officer Jack A. Hockema said Nov. 20 during Goldman Sachs Group Inc.’s annual Global Metals and Mining Conference in New York, which was also broadcast online.

One thing the Foothill Ranch, Calif.-based aluminum products maker won’t do is use its Trentwood facility in Spokane, Wash., to serve the automotive sector, Hockema said. That operation will continue to meet demand from the aerospace market, he added.

The automotive sector is a "major growth market," but Kaiser is focused on opportunities in automotive aluminum extrusions, Hockema said. That market is expected to grow at a compound annual growth rate of 5 percent, with aluminum extrusion content growing to 51 pounds per vehicle by 2025 from 26 pounds per vehicle in 2012, he said, noting also that 5 percent was likely a conservative estimate.

Still, Hockema acknowledged that automotive aluminum sheet is growing at a faster clip than extrusions, estimating a sheet compound annual growth rate of roughly 14 percent over the next 10 to 15 years.

Pittsburgh-based Alcoa Inc. and Atlanta-based Novelis Inc. have been most aggressively investing in automotive sheet capacity, he said.

Kaiser is also eyeing aluminum lithium for the aerospace sector, but isn’t yet participating in that market, Hockema said. "We in fact do have the capability to produce aluminum lithium," he said. "But we’ve chosen not to make a major investment there yet."

The market for aluminum lithium is only beginning to develop, according to Hockema. If aluminum lithium turns into a significant, long-term market, Kaiser "will be prepared to participate," he said, pointing to Alcoa and aluminum products maker Constellium NV as the current leaders in the sector.

Constellium this past week said it won a contract to supply aluminum products for airframes, including its low-density aluminum-lithium solution called Airware, for Chicago-based Boeing Co.’s 787 Dreamliner (, Nov. 21).

Hockema estimated that roughly 70 percent of Kaiser’s value-added revenue comes from the aerospace and automotive sectors, with the balance from general engineering applications.

The North American automotive sector should see build rates rebound from recession lows to 16.2 million vehicles in 2013 before climbing as high as 18 million vehicles in the next three to four years, Hockema predicted. At the same time, aluminum content per vehicle will rise, he said.

On the aerospace front, aluminum content is expected to grow thanks to a trend toward larger planes, with even composite-heavy planes using more aluminum than traditional models, Hockema said. In addition, aerospace plate should benefit as more aluminum components are machined from plate due to a move toward "monolithic" design, where parts are whittled away from a single sheet of plate instead of traditional manufacturing techniques that saw them comprised of several different aluminum products, he said.

But despite his bullishness on the long-term prospects of the aerospace sector, Hockema reiterated predictions that an aerospace plate overhang could drag into 2015 (, Oct. 18) before the market returns to normal demand levels in 2016 and 2017. But Kaiser still expects strong sales in 2014, he said.

"The bigger impact ... is on pricing. ... Some of our competitors apparently aren’t going to have strong sales, and we’re seeing a lot of pricing activity in the marketplace that’s affecting our spot prices," Hockema said, noting that resulting price erosion will likely offset Kaiser’s sales growth in 2014.

Hockema didn’t reveal who these competitors are.

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