MOSCOW – Carmakers including Ford, Audi and Jaguar Land Rover are using record amounts of aluminum to replace heavier steel, providing relief to producers of the metal who are dealing with 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, an analyst at Barclays Plc.
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, a third of aluminum companies aren’t making money, according to Moscow-based United Co. Rusal, the biggest producer.
Automakers like Ford, the second largest in the United States, should help pull aluminum suppliers out of a slump, said Kirill Chuyko, an analyst for BCS Financial Group in Moscow.
Some 25 percent of demand is from the transportation industry, with cars and light trucks using two-thirds of that, or about 10 million metric tons a year, the International Aluminum Institute estimates.
In the U.S., changes to the popular Ford F-150 pickup truck loom as the largest automotive threat to the steel industry. The next generation of the pickup will be redesigned, with a higher aluminum content helping to reduce the vehicle’s weight by as much as 750 pounds, Ford has said.
The F-150 is the best-selling vehicle in North America and would likely trigger all other truck-makers to convert to increased aluminum content, said Kenneth Hoffman, sector head for metals and mining research at Bloomberg Industries.
A switch to aluminum among U.S. carmakers could add as much as 40 percent to North American demand in coming years, said Hoffman, whose speech to steel executives in Chicago last month was titled The Death of the Steel Industry as We Know It.
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 European Aluminum Association show.
Tightening fuel economy regulations continue to drive the growth of the aluminum usage, said Charlie Durant, senior consultant at metals analysis company CRU in London.
For each 10 percent of reduction in vehicle weight, car manufacturers achieve a 5 percent to 7 percent fuel saving, Alcoa says on its website. A car with components made of aluminum can be 24 percent lighter than one with components made of steel, shaving a gallon off fuel consumption for each 120 miles, according to Rusal.
Only 54 percent of potential car buyers were willing to pay for more fuel efficiency in 2008, while in 2012 the number had climbed to 83 percent, Alcoa said on a conference call in October, citing a consumer study.
Global automakers may increase use of the light metal to 249.5 kilograms per car in 2025 from 148.3 kilograms in 2009, the Aluminum Association said last month.
The association gave its forecast as Honda presented an Accord with increased aluminum content and General Motors, which has an Allen County truck assembly plant, unveiled the Cadillac ATS and the 2014 Chevrolet Silverado at the annual Detroit auto show.
Aluminum is an excellent material for vehicle bodies, said Christoph Lungwitz, Audi’s spokesman for products and technology. Audi’s 1994 A8 model was the world’s first large-volume production car with a self-supporting aluminum body.
The material is roughly two-thirds lighter than conventional grades of steel, and since it is a relatively soft metal, it is easy to machine, he said.
The metal’s price peaked at $3,317 a ton in 2008 and has averaged about $2,200 in the past five years, data compiled by Bloomberg show. Prices slumped about 15 percent in 2012, while producers pared global output by 3 percent, according to the aluminum institute, a trade group in London for producers.
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, according to Barclays’s Berry.
Demand from automakers alone will not be enough to offset the surplus the industry is facing over the next couple of years, she said. To address that, producers need to show some production discipline.