Novelis sees 4 pct rise in European aluminium product demand

Rolled aluminium products maker Novelis expects a 4 percent rise in demand in Europe this year and is considering further expansion of its European recycling, the European head of the U.S.-based company said on Wednesday.

"Demand for rolled aluminium plate is good to very good," Novelis Europe president Erwin Mayr told Reuters. "We expect growth of about 4 percent this year in Europe with the main growth coming from strong demand from the automotive sector and beverage cans sector."

Low oil prices are not seen as reducing pressure on vehicle manufacturers to use more aluminium to cut fuel consumption through making vehicles lighter, he said.

"CO2 emissions do not depend on the oil price and the pressure to reduce the CO2 footprint will remain unchanged in the short, medium and long term," Mayr said. "The pressure to reduce the CO2 footprint could actually increase as low fuel prices could lead to more large luxury cars being sold which would have a larger aluminium content."

"The current trend towards reducing CO2 emissions and towards larger cars is positive for aluminium."

Novelis produces about 1 million tonnes of aluminium products in Europe annually with production and recycling operations in Germany, France, Britain, Switzerland and Italy.

Strong sales of energy drinks are supporting demand for aluminium for drink cans, he said.

Demand in Germany is also strong after discount supermarkets Aldi and Lidl decided to sell drinks in metal cans again. The discounters had removed cans from their German supermarkets because of a compulsory deposit scheme requiring retailers to take back empty cans.

Novelis has a global target of increasing recycled aluminium content to 80 percent of output by 2020.

In October, Novelis inaugurated a $258 million aluminium recycling plant in Nachterstedt in Germany to produce 400,000 tonnes of aluminium annually using scrap.

Nachterstedt is currently in its start-up phase working at about two-thirds capacity and is likely to reach full capacity in the second half of this year, Mayr said.

Novelis is considering opening further recycling plants in Europe, but decisions have not been made about location or size, he said. Two plants could be involved.

But they would be smaller than the large Nachterstedt plant.

European scrap aluminium supplies are currently good with signs less scrap is being exported to Asia, he said.