Carmakers are using record amounts of aluminum to replace heavier steel, providing relief to producers of the metal confronting excess supplies and depressed prices. Aluminum content in vehicles is rising about 5 percent a year and growth will accelerate in the next decade as drivers seek improved fuel economy and lower emissions, according to Gayle Berry, a London-based analyst at Barclays Plc.
“This is one of the reasons why aluminum has the most bullish long-term demand outlook of all the base metals,” Berry said, without disclosing forecasts.
Producers are hungry for new markets, even at the expense of steelmakers. At current aluminum prices, which are more than a third below 2008 highs, at least 30 percent of aluminum companies aren’t making money, according to Moscow-based United Co. Rusal, the biggest producer. Rio Tinto Group Chief Executive Officer Tom Albanese resigned Jan. 17 as the company unveiled $14 billion in write down, largely in aluminum.
Automakers like Ford can help pull aluminum suppliers out of a slump. Some 25 percent of demand is from the transport industry, with cars and light trucks using two-thirds of this, or about 10 million metric tons a year, the International Aluminum Institute estimates.
In the U.S., the popularity of the Ford F-150 pickup truck looms among the largest threat from automakers to the steel industry. The next generation of the pickup will be redesigned, with a higher aluminum content helping to reduce its weight by as much as 750 pounds (340 kilograms), Ford has said.
A switch to aluminum among U.S. carmakers could add as much as 40 percent to North American demand in coming years.
“Strong demand growth from the automotive sector would be very positive for the industry,” said Steve Hodgson, Rusal’s director for international sales.
The aluminum used in each car built in Europe almost tripled between 1990 and 2012 to 140 kilograms from 50 kilograms as manufacturers pursue higher fuel efficiency, data from the Brussels-based European Aluminum Association show. Among U.S. automakers, the figure climbed to 155.6 kilograms in 2012 from 148.3 kilograms in 2009.
Global automobile sales exceeded 80 million for the first time in 2012 and will advance 2.4 percent to 82.7 million this year, according to LMC Automotive Ltd., a research company based in Oxford, England.
Global automakers may increase use of the light metal to 249.5 kilograms per car in 2025 from 148.3 kilograms in 2009, the Arlington, Virginia-based Aluminum Association said last month. North American applications of aluminum in cars may jump 66 percent by 2025 to at least 3.7 million tons, according to Hoffman, citing the Aluminum Association study.
In Europe, the aluminum content in cars may rise to as much as 180 kilograms per unit by 2020, the Brussels-based association says.
Stepped-up use of aluminum in cars will “fuel strong growth in demand for the light metal and we forecast that total consumption of primary aluminum will expand by a compound annual growth rate of 5.9 percent over the coming 5 years,” said CRU’s Durant.
Aside from the A8, Audi has applied the technology in its R8 and TT compact sports cars, using its so-called Audi Space Frame aluminum body.
Land Rover is to offer a new generation of Range Rover as a part of a 1 billion-pound ($1.6 billion) investment program, which will be the first sports utility vehicle with a lightweight all-aluminum monocoque body structure.
The Mercedes-Benz SL roadster’s body-shell is made completely of aluminum, and is around 110 kilograms lighter than a comparable steel body, Benjamin Oberkersch, a spokesman for Daimler AG, which makes the car, said by phone Jan 22.
Even so, aluminum producers may need to curb output to tackle an excess in supplies that may be the biggest in four years in 2013.
The chief argument against aluminum is the cost, about three times that of steel, a point that is holding back producers in the world’s largest auto market. “At the moment, this technology is mostly used for premium cars because it’s expensive, and Chinese are not in the premium segment yet,” said Christian Ludwig, a Dusseldorf, Germany-based analyst.
The potential for increased use of aluminum in China car making is clear: the transportation sector accounts for 24 percent of the country’s demand for the material, compared with 40 percent in the U.S.
