More aluminum capacity to be dedicated to Autos in North America

Alcoa and its competitors have enough rolling capacity in North America to meet demands from automakers for more sheet aluminum, but aluminum-intensive vehicles will take material away from other uses, says Mike Murphy, vice president-automotive at Alcoa.

The losers will be the lowest-margin products, he says, which in some cases will be beverage cans.

Alcoa has made two $300 million investments in recent years to increase automotive-specific capacity. An expansion in Davenport, IA, is ramping up now. In Tennessee, where an existing beverage-can line had excess capacity, automotive aluminum production will be ready in 2015.

A third investment, of $400 million, in a joint venture with KSA in Saudi Arabia also will result in its first automotive coil in 2015.

The basic rolling capacity exists to meet the “huge growth potential for aluminum sheet,” says Murphy.

Automotive people like to worry about supply, and the concerns have been heightened by studies from the Ducker market research group.

In 2011, Ducker projected automotive would use 1 billion lbs. (453 million kg) of aluminum annually in 2025. Now, it projects 4 billion lbs. (1.8 billion kg). The average in light vehicles was 136 lbs. (62 kg) in 2011, and now it is up to 214 lbs. (97 kg).

While the rolling capacity is available, automotive sheet needs special heat and chemical treatments, so Alcoa’s investments are going into existing facilities.

“These are lines you don’t expect to shut down in five or seven years,” he says, adding that greenfield construction would be more expensive.

Most automotive aluminum will go to pickups, SUVs, minivans and other large vehicles, Murphy says. Midrange cars will have a higher percentage of aluminum, he says.

A third of all hoods now are aluminum, and Ducker predicts that will grow to more than 80%, and there will be more on deck lids and roofs. He says Alcoa had contracts in hand for sheet aluminum when it made its investments in North America.