Aluminum Demand to Continue, Thanks To Auto Industry

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In an exclusive interview with MetalMiner at Aluminum Week in Chicago, Aluminum Association president Heidi Biggs Brock echoed the big point of the overall conference: that the automotive sector is truly driving aluminum demand:

Automotive ‘Lightweighting’: Boon for Producers and Prices?

From his keynote presentation last week, Kaiser Aluminum CEO Jack Hockema suggested that government regulation is nearly single-handedly the key driver of auto-grade aluminum demand, simply because corporate average fuel economy (CAFE) standards continue to push automakers to “lightweight” their vehicles.

But has that push reached its limit?

In terms of short-to-medium-term demand, however, CAFE standards are already locked in to a certain extent.

Michael Robinet, managing director of IHS Global Consulting, said that “the bread’s been baked out to 2022” in terms of emissions regulations. Regardless of who gets elected president, don’t expect Romney or Obama to change this much.

So with standards already hitting their ceiling, the focus turns to what automotive OEMs have to do in the present.

Since the 1980s, the North American auto industry sacrificed fuel economy for more comfort, more safety, more space, and more horsepower; the goal now — and the American auto industry’s biggest challenge — is to keep all these in place while continuing to increase fuel economy.

So said Richard Schultz, managing director of Ducker Worldwide’s automotive materials practice. Schultz, having worked at Alcoa for 40 years, outlined some numbers of lightweighting.

To save 10 percent of current vehicle weight, for example, Schultz said OEMs must take out 400-800 pounds per vehicle, depending on the size of vehicle, and based on 2008 numbers.

exact aluminum prices - MetalMiner IndXFrom a cost perspective, advanced high-strength steel (AHSS) costs $.50 per pound in weight saved, while aluminum is around $2 per pound in weight saved — even at $2 per pound, aluminum is looking increasingly more attractive to auto OEMs, he said.

Continued in Part Two.

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