For US Aluminium industry downstream sector is ‘future’

More than five years have passed since the US aluminium industry first took to downstream production. Over the time the market has grown in size, both value-wise and volume-wise. The primary aluminium smelters had still managed to survive, but over the time they slowly turned uncompetitive thanks to cost escalation of power. The primary producers’ worries got aggravated when China started flooding world markets with excess aluminium supply.

This prompted major primary producers come ahead to form consortiums which started pushing the government to impose trade barriers on Chinese imports of the metal. A bundle of other restrictions are also being recommended by the trade bodies to protect the domestic aluminium industry from Chinese dumping onslaughts.

Despite all the initiatives taken, analysts believe, there is little hope that smelter operations in the US will get back its usual rhythm and it is downstream industry that will survive and flourish.

In fact, the shift has already happened. Kaiser’s value-added revenue in 2015 hit a record $790 million, an eight-percent year-on-year increase. The results were driven largely by higher heat treat plate volume and continued growth in automotive extrusions.

Alcoa is on their way to creating a separate value-add business- Arconic. And then there is Novelis and Constellium. Both the companies are adding to their own value-added technology and product portfolios like never before and earning decent revenues at a time when rest of the industry is reeling under volatile aluminium price and oversupply effects.

Downstream aluminium industry is an important employment generator in the U.S. According to the Aluminum Association, out of 161,000 workers who are directly employed in the aluminium industry a major chunk belong to the value-added sector.

“The number of core production jobs is increasing, including those related to foundry operations, secondary smelting and alloying. Aluminium processing jobs are increasing in many areas, including the production of sheet, plate, foil and extruded products,” the Aluminum Association said in a report.

And why only semi-fabricated aluminium products? The end-user markets for aluminium too are booming. Ever since Ford launched their aluminium-body F-150 pick-up truck the end-use industries has picked up momentum.

Aluminium smelting has been an important part of America’s past but to keep the show rolling more focus need to be given on fabricating production, because that is ‘the real engine that’ll be powering the US domestic aluminium industry.’