Aluminum producers, processors rush to expand capacity for automotive applications

By Corinna Petry

May 29, 2014 - The 54 miles-per-gallon fuel economy target has pushed automakers to lightweight vehicles in every way possible. Many carmakers are exponentially raising aluminum content, which has led to a blossoming of capacity expansion projects, particularly in the United States.

Modern Metals has run down major projects announced or completed in the past six months, or that are being considered, providing some details and reasoning behind them.

The U.S. Department of Energy is trying to help the supply chain move quickly toward the new fuel standard with low-cost loans under the Advanced Technology Vehicle Manufacturing program. Alcoa applied for one such loans to help finance its $275 million automotive sheet capacity expansion in Tennessee.

“We are in the due diligence phase with the DOE for its ATVM program,” a company spokeswoman confirmed this week. The project broke ground in August 2013 and “is on schedule,” she added.

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A DOE form filled out by Alcoa states that the project, to start up in mid-2015, will provide an additional 640 million pounds per year of cold rolling capacity, intended for the automotive market, of which 300 million pounds can be heat treated.

Severstal North America applied for a $730 million loan under the ATVM program in 2011 to modernize its Dearborn, Michigan, plant and boost production of advanced high strength steel, but Severstal’s own financial records show it received a $70 million loan. Some U.S.-based steelmakers, through their elected representatives, objected to a foreign-owned company receiving such favorable treatment from the U.S. government.

Alcoa just completed a $300 million expansion at its Davenport, Iowa, facility in January. 

“The amount of aluminum body sheet content in North American vehicles is expected to quadruple by 2015 and increase tenfold by 2025 from 2012 levels,” chairman and chief executive officer Klaus Kleinfeld said at the time.

“Automakers are increasingly choosing aluminum as a cost-effective way to improve the performance, safety, durability and fuel efficiency. Our project in Iowa was the first of three capacity expansions we have to meet this growing demand.”

Novelis Inc. announced in mid-December that it would invest $120 million to build a third finishing line at its plant in Oswego, New York. The line will have 120,000 metric tons of annual aluminum automotive sheet capacity, bringing the entire plant to 400,000 tons per year. 

This work reflects the escalating global demand from automakers for aluminum sheet, which Novelis “expects to grow by more than 30 percent per year through the end of the decade,” executives said.

When the new line is commissioned in late 2015, the Oswego facility will devote 80 percent of its total capacity to serving the automotive market.

Another development is a partnership between the Netherlands-based Constellium N.V., Japan-based UACJ Corp. and its Tri-Arrows Aluminum Inc. subsidiary in Louisville, Kentucky. They will build a $150 million, 225,000-square-foot aluminum production facility in Bowling Green, Kentucky.

Using cold-rolled coils from Tri-Arrows, the plant will produce finished aluminum body sheets for cars and trucks. Constellium and UACJ both will also supply coils to be treated and processed in Bowling Green.

“This project is very significant for UACJ in terms of our body in white market strategy,” chief executive officer Mitsuru Okada said in a May 9 statement. “This joint venture (will) tackle the automotive market in the U.S.”

Demand for aluminum sheets “is growing as more automotive manufacturers are switching to aluminum from steel. Aluminum allows vehicles to be lighter, which helps manufacturers comply with new federal fuel standards,” the partners stated.

By September, two major Japanese companies will have concluded a study on whether to form a joint venture to produce and sell aluminum sheet for automotive body panels and automotive heat exchangers. If they agree, Kobe Steel Ltd. and Toyota Tsusho Corp.’s JV would start up operations in 2017. Kobe Steel would oversee production, quality assurance and business operations; Toyota Tsusho would market the products. Kobe Steel is in talks with Wise Alloys LLC, Muscle Shoals, Alabama, which now rolls beverage can stock, to be its source of master coils.

“North American demand for aluminum body panels is anticipated to increase from 100,000 tons per year now to over 1 million tons in 2020,” Kobe and Toyota Tsusho estimated.

Lastly, Delaco Kasle Processing Indiana LLC (DKP), which processes exposed and unexposed aluminum and steel coils and blanks, will locate its operations in Jeffersonville, Indiana. This relates to an earlier Diez Group/Steel Technologies LLC joint venture announcement that included Kasle Metal Processing. Diez—part of the Delaco Steel family of businesses—and STI are spending $14.3 million to add new production lines and build out the Jeffersonville plant to 226,000 square feet by summer 2015.

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