Aluminium use in mass market autos to surge -Alcoa

Tue Apr 16, 2013 10:11am EDT

Related Topics

* Alcoa auto sheet revenues to more than triple by 2015

* Aluminium moving from luxury segment to mass market autos

By Eric Onstad

LONDON, April 16 (Reuters) - Alcoa expects to more than triple its sales of aluminium sheet to automakers by 2015 as they reduce car weight by substituting it for steel in car bodies, an Alcoa executive said.

Revenue from auto sheet - mainly used in car bodies - is expected to surge to $580 million by 2015 from $160 million last year, Randall Scheps, global automotive marketing director, said in a telephone interview.

"It is moving from the very expensive, luxury vehicles into the mass market vehicles. That's what so exciting about what's going to happen in the next two or three years," Scheps said.

Car makers are being forced to cut weights of cars to meet tough emission standards. Aluminium is a third of the weight of conventional steel but more expensive.

The steel and aluminium industries are in a high stakes battle to supply auto companies, with many car makers using advanced high-strength steel because of its lower costs.

Aluminium has already made inroads in the auto market through extensive use in engine blocks, heat exchangers, transmissions and wheels but still has scant presence in doors, bonnets and wings.

The exception has been in top-end vehicles such as Audi, Jaguar and Range Rover, which have used aluminium in bodies and been able to absorb the higher costs.

In terms of tonnage, the use of aluminium auto sheet for bodies in North America is expected to quadruple to 420,000 tonnes by 2015, and aluminium used elsewhere in cars to grow by 15 percent to 2.66 million tonnes, Alcoa said.

"Out to 2015, those programmes and vehicles are already designed ... those decisions are already made. It's as close to reality as a projection can be," Scheps said.

FORD PICKUP

Scheps declined to name the car companies, which the industry calls OEMs (original equipment manufacturers), that are boosting use of aluminium in mass-market autos due to confidentiality agreements.

According to people familiar with the matter, however, Ford plans to do so for its popular F-150 pickup, looking to shave an average of 700 to 750 pounds through extensive use of aluminium as well as a redesign of components including brakes and axles.

A Ford executive has said the company is exploring the use of lightweight materials including aluminium and high-strength steel across its lineup.

New technologies have helped aluminium adapt to the demands of speedy assembly lines, so that it can move to mass market autos.

Alcoa's new 951 bonding technology is a pre-treatment that enables car makers to use adhesives in high-volume applications instead of labour-intensive mechanical fasteners and welds.

That 951 technology in being incorporated into a $300 million automotive expansion at Alcoa's Iowa plant and will be used in a sheet rolling automotive facility at the group's new joint-venture Maaden smelter in Saudi Arabia, Scheps said.

Aluminium use in autos in China, the world's fastest growing car market, will be driven at first by European joint ventures, said Scheps, who is also chairman of the Aluminum Association's Transportation Group.

"It's very early days in China. We certainly see the German OEMs very interested in making the shift in their Chinese operations, but for the local Chinese OEMs it is a little early."

While some analysts have questioned whether Alcoa should continue to run a downstream business, Scheps said the commitment was still strong to produce manufactured components, not just primary metal.

"Our chairman has made it very clear that we are committed to an integrated company and that there's value in the 'Alcoa advantage' where the primary and the downstream businesses are connected."

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Comments (1)
brotherkenny4 wrote:
Car companies have always avoided alterations to vehicles that bring the price up, even if there is a cost savings later on fuel. The american people have never been bright enough to understand that a car that uses less gasoline can be less expensive over it’s useful life than a less expensive car that get’s poorer gas mileage. Of course, the car companies and the dealer prefer an ignorant clientel, because most of the vehicles they sell are frivolous and cost more. They don’t want people to actually think rationally, since that leads to more intelligent decision making and that won’t be as profitable for the car companies and dealers. If someone implies that there is nobility in ignorance, you know they are setting you up to get taken.

The only reason aluminum and other relatively old technologies are finally getting implemented in vehicles now is because there is certainty that the price of gasoline will remain high. Despite all the good news about the alternative fossil energy production methods, those techniques have become a big enough percentage of our actual usage to guarantee the higher price. Fracking and tars sands and deep water wells all need the price of oil to stay above $80-90 a barrel or they become unprofitable. So if the price drops those producers will stop development and supply will dry up, once again driving price up. I predict the oil companies rather than declining in profitability as oil supplies dry up, will actually increase their profitability as supplies tighten and that will incentivise them even more to work against changes in our energy production and use systems. They will pin us to oil until we crash, because that is what is most profitable for them. The destruction of our economy and country is in their best finacial interest and indeed, the CEOs have legal obligation to destroy the United States for their profitability.

Apr 17, 2013 10:46am EDT  --  Report as abuse
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