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Auto aluminum ‘holy grail’ not without risks

Keywords: Tags  aluminum, automotive sheet, extrusion, scrap, AEC, Aluminum Extruders Council, Kevin Moore, All Raw Materials Consulting Ford

CORAL GABLES, Fla. — The aluminum industry and aluminum extruders should see big benefits as cars and trucks use more of the light metal because of stricter fuel economy standards, according to one consultant.

But the “holy grail” of mass-produced aluminum vehicles won’t come without significant risks, including potential overcapacity, an extremely tight scrap market, fierce competition from steel and fickle consumers, Kevin Moore, president of Clarkston, Mich.-based All Raw Materials Consulting, said March 19 at the Aluminum Extruders Council’s annual meeting in Coral Gables.

The average amount of aluminum per vehicle should jump to between 550 and 650 pounds by 2025 from 364 pounds last year, Moore said.

Aluminum sheet will see the lion’s share of that growth, but extrusions will benefit too, he said, noting that North American vehicles are expected to each sport an average of 49 pounds of aluminum extrusions by 2025, up 81.5 percent from about 27 pounds last year. “That is a huge growth,” he said.

Dearborn, Mich.-based Ford Motor Co.’s F-150 pickup will sport an aluminum body in 2015, boosting the use of aluminum in that model to 1.3 billion pounds (, Jan. 13), while Detroit-based General Motors Co. reportedly plans to increase the use of aluminum sheet in its pickup trucks by late 2018 (, Feb. 19).

But it remains to be seen whether consumers will share the aluminum industry’s enthusiasm for aluminum pickup trucks, Moore said. “There has to be a perception ... that it’s as good as or better than steel.”

Also favoring steel are deep relationships with automakers, said Moore, a former executive at GM. “The steel industry has been right in our backyard. They have had engineers helping us to design cars forever.”

Less immediate but also problematic is potential automotive aluminum overcapacity, Moore said, harking back to his experience at GM. Automakers “would announce a new program, and people would just fall over themselves. You’d get excess capacity, and then we’d be happy because we’d have lots of choices and we could drive the price down,” he said.

And aluminum, while lighter than steel, remains more expensive, with original equipment manufacturer (OEM) concerns about pricing exacerbated by negative publicity surrounding the London Metal Exchange contract and Midwest premiums, Moore said. “As an OEM, they are both pretty darn frustrating when it gets down to transparency,” he said.

Also weighing on automotive aluminum is a tight nonferrous scrap market, Moore said. Closed-loop recycling will be critical, and Ford is already putting necessary segregation systems in place, he said. But the automotive industry using more scrap means other industries may be forced to use less, in part because “post-consumer” automotive aluminum scrap is about 13 years away. “There is going to be a lot of post-consumer scrap driving around for a lot of years before it builds up into a big bank of scrap,” he said. In the meantime, “the scrap battle will intensify.”

Also in question is what happens to that bank of scrap once it forms, Moore said. “The production scrap will go directly from the plant back. ... But with post-consumer scrap, what are you going to have as far as a mix and what is the value?”

One thing Moore isn’t worried about is the manufacturability of aluminum. The steel industry may “talk a lot” about the issue, but automakers are already used to handling aluminum, and new bonding technologies should further alleviate such concerns, he said.

Constrained capacity shouldn’t be a concern either, Moore said. “Major aluminum producers are chomping at the bit for this ‘holy grail’ opportunity and will ensure the capacity is there if needed,” he said, although he noted that there may be short-term constraints, especially in heat treating. And in addition to projects that have already been built or announced, there are rumors that Middle East aluminum producers are considering making automotive aluminum sheet and shipping it worldwide, while Japanese suppliers are said to be mulling sending auto aluminum sheet to Mexico, Moore said.

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