Aluminium   Auto  

Slowing auto sales may boost Al can sheet output

The trend of US aluminum rolling mills turning away from longtime staple product can sheet in favor of higher-margin automotive body sheet may be cut short as auto sales slow.

The runup in US auto sales in recent years has received much of its support from a massive expansion of credit to buyers, which points to potentially fragile further growth, Regional Metal Services president Garey Rittenhouse said at an major aluminum conference this week in Florida. Leading the charge was an expansion of sub-prime lending to keep up with auto sales, he said.

"To sell the amount of vehicles we do today, they had to go deeper down into the credit pool," Rittenhouse said.

Average US vehicle financing surged by 26pc between 2012 and 2019 while US automotive debt ballooned to $1.2bn from $797bn between 2008 and 2019, he said.

But US auto sales have been slowing from record highs in recent years, with the December seasonally adjusted annual rate declining to 16.7mn light vehicles from 17.4mn vehicles a year earlier. Major auto original equipment manufacturer (OEM) Magna International forecast 2020 auto production to be flat with 2019.

"I expect the margins associated with [aluminum] panels in the automotive sector to come under pressure during the next downturn," Rittenhouse said. "This in turn may bring about some changes in how the flat-rolled sector allocates production capacity, and this brings us to a place where can sheet, once again, may become a better part of the mix."

In 2014, Ford announced its first aluminum intensive F-150 truck, which resulted in four domestic rolling mills and one prospective mill entering the automotive body sheet market.

While many mills continue to produce can sheet, the emphasis on new investment clearly shifted to favoring automotive sheet, which has a higher selling price because it is more highly engineered than can sheet.

Market participants are closely watching US automotive body sheet maker Arconic in particular, with some expecting the company to return some of its rolling capacity to can sheet in 2021.

Argus assessed spreads for can sheet raw material used aluminum beverage cans (UBCs) at 56-58pc of the Midwest transaction price this week, little changed from the same week in 2019.

By John Betz

News No: 8327
Date: 2020/01/24 - 18:42
News Source: Argus Media

auto  aluminum  US  UBC  automotive 


Leave a Comment:


Japan's coking coal imports rise in January

Japan's coking coal imports rose in January as it took more shipments from Australia and the US despite increasing spot prices.

China’s steel stock build slows on output cuts, sales

China's steel inventory build slowed this week as mills and traders ran out of storage space, forcing output cuts and an increase in deliveries to customers.

Vietnam January coal imports up but virus hits outlook

Vietnam's coal imports increased in January compared with a year earlier, but growth eased from December as electricity generation dipped. And a slowdown in industrial activity because of the coronavirus outbreak could weigh on the near-term outlook for imports.

Chinese aluminium firm Zhongwang announces to sell its smelter for $656 million

One of the world’s biggest aluminium extrusions manufacturer, China Zhongwang Holdings, on Wednesday, February 26, announced that it would sell its loss-making smelter for $655.94 million.

NICIL Guyana pays February salaries to sacked Rusal owned BCGI workers

The National Industrial and Commercial Investments Limited (NICIL), a Government of Guyana holding company, has paid the salaries for February to the 326 workers sacked by the Rusal-owned Bauxite Company of Guyana Inc (BCGI).

OPEC+ Should Decide on Coronavirus Response Later

Gazprom Neft CEO Alexander Dyukov said Wednesday the OPEC+ group of oil producers should respond to the impact of the coronavirus outbreak but decide on quotas later on.
Upcoming Events
 Mines & Metals

Mine & Business Today

 Scrap & Recycling


Our partners