According to projections, the United States was expected to register a GDP growth of 2.4% in 2023, followed by a slight deceleration to 1.5% in 2024, before picking up marginally to gain 1.7% in 2025. As per the data released by Trading Economics, there has been an annual expansion of 5.2% in Q3 2023, higher than the predicted growth format. The latest Outlook report has projected a moderate global GDP growth of 2.9% in 2023, which is expected to slide down to 2.7% in 2024 before picking up to 3.0% in 2025. It is anticipated that Asia will continue to spearhead most of the global growth throughout 2024-25, just as it did in 2023. But what does this mean for the entire United States and its trade economics?
AL Circle's Outlook report highlights a range of risks that could impact the global economy. Geopolitical tensions remain a key source of uncertainty and have escalated further following the Israel-Palestinian crisis. Amidst greater geopolitical tensions and a longer-term decline in trade intensity, there could be a failure in the anticipated cyclical pick-up in trade growth. However, on the positive side, stronger consumer spending could boost growth if households utilise their accumulated savings from the COVID-19 pandemic, although this could also lead to increased persistence of inflation. According to the data provided by Hedges and Company, there are almost 1.474 billion vehicles on Earth in 2023, of which 19% are in the United States. Since the USA's automobile industry is looking for lightweight, durable materials that are not detrimental to the economy, aluminium has high demand in the area.
USA's leading car brand, Tesla, has revolutionised the conventional method of automobile body casting by incorporating gigacasting technology, which is being revered by other established vehicle makers from all over the world, like Toyota, BMW, Volvo, and Hyundai. Linamar, a Canadian manufacturing company, announced its plans to optimise a new giga casting plant in Welland, Ontario. This plant is expected to start operations in February 2025 and will supply structural aluminium castings for lightweight automobiles. The company has already started preparing the site for the plant, which will make Linamar the first Tier 1 supplier outside of Asia to use high-pressure die-cast giga press machines. Linamar is optimistic about the growing demand for sustainable vehicles in the market and has planned to produce "very large structural parts for electric vehicles." While the company has not disclosed any information about its customers or supply deals, the strategic location of the plant near manufacturing bases in Michigan and Ontario offers numerous potential clients. This could lead to better proximity with the US and Canadian manufacturing zones for providing tailor-made aluminium components for vehicles.
Giga casting gained popularity with Tesla's IDRA Giga Press machines, which produce single-piece front and rear castings for the Model Y and later for Tesla Cybertruck's body. Linamar's investment in this technology shows its commitment to the future of sustainable vehicles and the production of lightweight and durable parts. Canada is one of the biggest importers of aluminium to the US, and being the world's fourth largest producer of aluminium after China, Russia and India, it has a stronghold in the entire North American sub-continent.
Crude metals and alloys imported to the US for consumption:
The recent data from USGS suggests that the import of crude metals and alloys to the USA for consumption decreased noticeably from January 2023 to August 2023. The highest importer to the USA during January 2023 was its neighbouring country, Canada, with a total of 230,000 tonnes in the warehouses, which declined by 9,000 tonnes or 3.91% in August 2023 to reach 221,000 tonnes. The second highest importer during January 2023 was UAE, as it recorded 36,000 tonnes. This also declined by 13,300 tonnes or 36.53% to anchor at 23,100 tonnes in August 2023. The third largest importer of metal, alloys, and crude to the USA in January 2023 was Qatar, with 7,860 tonnes, which was overtaken by Australia in August 2023, as it recorded a shipment of 13,200 tonnes.
Plates, sheets and bars imported to the US for consumption:
When we consider the import of plates, sheets and bars to the US, there can be a quick illustration through which we understand: In January 2023, the highest importer was China with 22,000 tonnes, which was overtaken by Canada in August 2023 with 19,500 tonnes. In January, Canada stood in second place with 18,000 tonnes of plates, sheets and bars imported, but in August 2023, Korea surpassed the number with 10,200 tonnes. Thailand rested in third place in January with 8,220 tonnes and was replaced by China in August with 8,510 tonnes.
Scrap imported to the US for consumption:
Scrap imports to the US have seen exponential growth from January 2023 to August 2023, with Canada and Mexico leading the entire market. In January 2023, the scrap import from Canada to the US was 31,800 tonnes, which grew by 12.89% or 4,100 tonnes in August 2023 to reach 35,900 tonnes. Similarly, the second-highest importer of scrap to the USA also experienced 5,800 tonnes or 37.18%, heightening stocks in August 2023 from 15,600 tonnes in January to 21,400 tonnes. It can be inferred that the global call for the usage of sustainable raw materials and recycled products has been the fundamental factor in this sequential growth. The import of crude metal or plate, sheets and bars has decreased in a matter of just eight months, while the scrap import has vehemently increased, with future growth projections.
Moreover, companies are no longer going to source aluminium from unknown sources, and the quality of the non-ferrous variant will be defined by the amount of carbon it contains. With the world moving towards circular materials with a lower carbon footprint, aluminium is going to play a vital role in its 100% recyclability and renewable properties. The existing primary aluminium producers in the USA are also moving toward greener and more sustainable methods of aluminium production by sourcing renewable energy and monitoring CO2 emissions with IoT and automation.
Some of the major aluminium companies in the USA, along with individual case studies, have been listed below:
Upstream Players
Alcoa: Alcoa Corporation is set to reactivate its aluminium smelter in San Ciprián, Spain, in 2024 after announcing a two-year hiatus to focus on a more robust smelting operation. The company signed two long-term wind power purchase agreements in 2022, providing up to 75% of the smelter's energy needs. Under the revised agreement with the workforce, a step-by-step timeline for the restart process, which will begin in January 2024, has been provided. The company has committed to investing $181 million in capital and restart expenses, $78 million more than the initial agreement. The US-based multinational aluminium company is planning to switch from fossil fuel-fired generating to grid-connected power supply at its Juruti bauxite mine in Pará state, Brazil. The project is expected to be completed by 2026 and will cut greenhouse gas emissions by 35% while halving plant energy expenditures. Alcoa aims to cut scope 1 and 2 greenhouse gas emissions by 30% by 2025 and 50% by 2030 to reach net zero emissions in its global operations by 2050. The company intends to invest in renewable energy sources, such as hydroelectric power, in addition to optimising bauxite extraction and the entire production process.
Century Aluminium: Century Aluminum gained $103.3 million on acquiring Jamalco, an alumina refinery, in which they now hold 55% of ownership. Jamalco converts mined bauxite into alumina, which Century Aluminum uses to produce primary aluminium. The Government of Jamaica owns the remaining 45% of Jamalco's shares. Century Aluminum also secured a new three-year power contract for the Mt. Holly aluminium smelter, which will commence on January 1, 2024, and provide the smelter with 295MW of electric power. This is great news for the US aluminium industry and a significant boost for the South Carolina economy.
The leading primary aluminium producer in the United States reported a decline of 10.97% in net income attributable to Century stakeholders during Q3 2023. The decline was due to lower shipments and poor aluminium prices on the London Metal Exchange. The company's net sales for Q3 2023 decreased by 5.26% from the previous quarter, while the Adjusted EBITDA attributable to Century stockholders was US$9.3 million versus US$29.5 million in the previous quarter. The global aluminium supply-demand balance was achieved in FY2023, with a demand of 69.8 million tonnes and a supply of 70.4 million tonnes.
Downstream Player
Arconic: Arconic, a renowned provider of aluminium sheet, plate and extruded products, announced its plans to expand its Blount County manufacturing operations with a significant investment of over $100 million in Tennessee in 2021. The expansion aimed to cater to the increasing demand for industrial products and can sheets. Earlier in 2023, Arconic Corporation completed its acquisition by Apollo Funds and Irenic Capital Management for a whopping US$5.2 billion, which made it no longer a publicly listed company. The acquisition was made at a price of $30 per share for all outstanding shares of Arconic stock. Arconic's Chief Executive Officer, Tim Myers, expressed his optimism that the deal would bring benefits to all stakeholders involved and enable Arconic to continue its legacy of excellence in the industry.
Recycling Initiatives
The Can Manufacturers Institute, the Alcoa Foundation, and the Arconic Foundation have come forward to support the Recycling Partnership in its sustainability programme. The Recycling Partnership has collected 4.1 million pounds of post-consumer aluminium scrap annually for recycling, reducing 18,750 tonnes of greenhouse gas emissions. The NGO aims to develop a circular economy in the aluminium packaging sector and is seeking upgraded sorting equipment and stimulating investments. The companies might have different operational backgrounds, but when the time for a sustainable quest arrives, none of them backs out.
The Pennsylvania Beverage Association invested $650,000 in Pittsburgh's recycling program through its Every Bottle Back initiative. This investment has provided free curbside recycling containers to 50,000 households, which is expected to yield nearly 25 million pounds of new recyclable materials over a decade. The investment will help Pittsburgh move closer to its "Bag Free in 2023" target, enabling the beverage industry to collect more 100% recyclable bottles and aluminium cans for remanufacturing. Furthermore, the Every Bottle Back commitment from America's leading beverage companies and The Recycling Partnership is a testament to the power of public-private partnerships.
SOLARCYCLE, a California-based company that specialises in recycling solar panels, has recently partnered with EDF Renewables North America, a leading French renewable energy developer with expertise in both wind and solar energy projects. The purpose of this collaboration is to focus on the recycling of damaged or broken solar panels from EDF's grid-scale, distribution-scale, and on-site solar sites. SOLARCYCLE's recycling proficiency will help reduce waste and promote sustainability in the renewable energy industry. The partnership's objective is to promote environmentally friendly practices by utilising SOLARCYCLE's innovative recycling techniques to minimise waste and maximise sustainability efforts in the renewable energy sector.
Packaging Market
The USA has one of the largest sustainable packaging markets in the world, with respect to both demand and production. Headquartered in the USA, Ball Corporation is a globally acclaimed organisation and a leading player in the metal packaging and aerospace technology sectors. It has established a strong presence in the aluminium industry in America and is widely known for its diverse product portfolio, innovation, and sustainability initiatives. With Ball Aerospace being its aviation subsidiary, the company's principal business areas are metal packaging, aerospace and technologies.
Ball Corporation's metal packaging segment specialises in producing aluminium beverage cans, food cans, and aerosol containers, and it is the largest aluminium can producer worldwide. The company's expertise in manufacturing lightweight, sustainable packaging solutions has positioned it as a key player in the beverage packaging industry. Ball Corporation is at the forefront of sustainability in the packaging industry by using aluminium, which is infinitely recyclable, aligning with the company's commitment to reducing environmental impact.
With a global footprint, Ball Corporation serves customers worldwide, providing packaging solutions for various industries. Its international presence enables it to adapt to regional market trends and demands. Ball Corporation's financial stability is underscored by its longstanding presence in the market. However, the company's performance is often influenced by metal prices, global economic conditions, and consumer preferences. Crown Holdings and Amcor follow Ball in the production of sustainable aluminium packaging solutions in the country. While the former is keen on making sustainable developments by taking part in World Climate Action Summit or COP28 in December 2023, the latter has reduced the carbon footprint of their STELVIN® aluminium screw cap range by up to 35%. They achieved this by using low-carbon aluminium and incorporating 46% post-consumer recyclable material.
The transition to a sustainable operational paradigm is the need of the hour as GHG emissions and global warming have started showing their effects on the planet. With the glaciers slowly melting down and the temperature rising above the historical average, the United Nations is urging all energy-intensive industries to seek greener ways of production. The USA, being at the helm of all the global political discussions, cannot sway away from its commitment to Net Zero by 2030.
Transition to Renewable Energy
Hindalco's subsidiary, Novelis Inc., and Southern Company have partnered to promote sustainable and eco-friendly aluminium production in North America. Both companies have agreed to work together towards decarbonisation of aluminium production, starting with Novelis' new Bay Minette aluminium recycling and rolling plant. As part of the partnership, Novelis will help Southern Company subsidiary, Alabama Power, in constructing two new 80-megawatt solar power generation plants in Alabama. In return, Novelis will benefit from the renewable energy generated by these plants, which will power its new Bay Minette plant. The partnership promises to promote sustainable and eco-friendly aluminium production in North America.
Headquartered in America, Novelis is one of the highly sought producers of low-carbon aluminium worldwide. The company has introduced a brand named AL:sust™, which offers an array of advanced and sustainable products. This collection comprises innovative aluminium solutions that are low in carbon and contain at least 80% recycled content, making it ideal for various markets and customer needs. The products are designed for multiple end-use applications, ensuring a sustainable future for all.
Novelis' AL:sust™ HRC57S® offers an exceptionally high-recycled content of more than 90%. This product expands the range of anodizing product solutions for architectural applications and provides an outstanding quality for decorative batch anodizing with superior bending and non-combustible properties. It is available in flat sheet dimensions and as a coil for further batch anodizing and processing.
Novelis' AL:sust™ HRC73A® is a pre-anodized product with a high-recycled content of more than 90%. It offers excellent bending properties, non-combustible properties, and outstanding AlMg1 quality with permanent metallic gloss. Available in coil or flat sheet dimensions, it is ideal for direct façade cladding and helps reduce the carbon footprint of new-build or redesigned structures.
On February 24, 2023, President Joe Biden issued Proclamation 10522 on Adjusting Imports of Aluminium into the United States. The proclamation announced that aluminium articles produced in Russia and aluminium-derivative articles produced in Russia would be subject to a 200% ad valorem tariff rate with respect to goods entered for consumption or withdrawn from the warehouse for consumption on or after 12:01 a.m. Eastern time on March 10, 2023. Additionally, imports of aluminium or aluminium-derivative articles, if any amount of primary aluminium used in the manufacture of the articles is smelted in Russia or the articles are cast in Russia, would be subject to a 200% ad valorem tariff rate with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern time on April 10, 2023. The USA has also imposed a high-carbon content levy tax on poor-quality imports from China or India, narrowing down its aluminium sourcing zones. But this was also essential to maintain a specific quality of USA's in-house aluminium products made with imported stock.
Overall, the demand for extruded aluminium, downstream components, and aluminium scrap is going to spike in the coming years due to the emergence of lightweight vehicles required to run the EV industry. Also, the USA is seeing increasing solar projects for renewable energy, which may, in turn, heighten the demand for aluminium. Most importantly, the USA's automobile and packaging industry demands a lot of responsibly sourced aluminium so that a circular economy around the country's entire industrial chain can be maintained. Ultimately, by choosing sustainable practices, the USA can lead the world to a greener and more eco-friendly future.
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