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Alcoa: Buy The World's Biggest Aluminum Producer At A Bargain Price
The global push to improve fuel efficiency in vehicle fleets will more than double demand for aluminum in the auto industry by 2025, Alcoa's director of automotive marketing said Wednesday.
Car makers from BMW to Audi have already started to plan for tougher Corporate Average Fuel Economy standards and are beginning to move away from heavier steel body frames to lighter-weight material in what should be the "next frontier" for the aluminum industry, Randall Scheps told delegates at the American Metal Market's Aluminum Summit in New York.
"Carmakers are basically reacting to increases in fuel economy requirements and regulations. Every major market around the world is tightening fuel standards," Scheps said.
"We have every car maker calling us, wanting to increase their aluminum content, wanting to start new R&D (research and development) projects about how they can convert bodies from steel to aluminum, wanting to convert hoods and doors from steel to aluminum."
German automaker BMW has steadily been increasing its use of the metal in recent years.
"It's an unprecedented time in the aluminum industry, and car bodies are the next frontier," Scheps said.
He anticipated this transition from steel-bodied frames to lighter-weighted aluminum to more than double the industrial metal's overall rate of consumption in the auto market from 11.5 million tons in 2011 to 24.8 million tons by 2025.
By then, the amount of aluminum in an average car will grow from the current 343 lbs to 550 lbs.
In order to support this automotive demand growth, Alcoa has invested $300 million in expansion projects at its Davenport, Iowa rolled products plant.
"That's the next phase of capacity to serve the automotive market, and the forecasts we are looking at now shows that this phase will be full by 2015," Scheps said.
President Obama has proposed increasing the U.S. CAFE standard from a target of 35.5 miles per gallon in 2016 to 54.5 miles per gallon by 2025, which was initially met with a lot of criticism from many automakers worried about rising costs and sticker-shocked customers.
But that resistance now appears to be fading.
"In the move to 54.5 mpg, the consumer is going to have to pay for a lot of things ... turbo chargers cost money, direct injection costs money, 8-speed transmissions cost money, and the aluminum will cost money, so what the automakers are doing are making this trade-off of what's the best bang for their buck in investing to improve fuel economy," Scheps said.
"If they can optimize the power-train together with the weight of the car, that gives them the best return."
Scheps also said competition from composite materials such as plastics and metals like titanium are "not going to happen in the near future".
"They are not compatible with the existing manufacturing infrastructure, too expensive, not recyclable, do not perform well in a crash and the manufacturing cycle time is too long.
"The consumer is never choosing one material over the other, they are choosing a full-sized car that gets a certain gas mileage," he said.
Jun 14 10:55 AM
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