Although this type of brief description may work for a personal ad, aluminum has moved into many more markets, and it seems as if the sky’s the limit when it comes to the number of uses for the metal. Well-known markets for aluminum include transportation, packaging (including beverage cans), and building and construction. However, its applications are quickly expanding in architectural and home decor, as well as in technology.

Up and down
Like most metal markets, there are ups and downs in aluminum’s forecast. Lynn Brown, senior vice president, sales and marketing for Extrusion Americas, Hydro Aluminum, Oslo, Norway, notes, "Commercial construction has remained relatively strong for extrusions, as have markets that are capital goods-related, such as electrical distribution and machinery. Also, the aircraft/aerospace market has been strong, along with renewable energy."

However, one big risk factor in a future aluminum outlook is the price of energy. On the last day of September, aluminum giant Alcoa Inc., Pittsburgh, announced it would curtail the remaining production at its Rockdale, Texas, aluminum smelter, which produced approximately 150,000 metric tons of production a year. The reasoning behind the curtailment: uncompetitive power supply.

"The rapid and pronounced increases we saw earlier this year have had a major impact on extrusion costs," Brown says. "Natural gas and diesel were the initial problems, as they’re the key to both process costs [age ovens and cast house furnaces, among others] and transportation. More recently, they’ve eased, but industrial rates for electricity are increasing substantially."

According to the Energy Information Administration, the average retail price of energy increased from June 2007 to June 2008 across all census divisions. The largest increase was in the West South Central region (Arkansas, Louisiana, Oklahoma and Texas), which increased from 7.2 cents per kilowatt hour in 2007 to 9.04 cents per kilowatt hour in 2008. The Pacific Noncontiguous (Alaska and Hawaii) increased from 16.3 cents per kilowatt hour in 2007 to 23.89 cents per kilowatt hour in 2008.

"Extruders are dealing with the impact in a couple of ways," Brown notes. "Some have added energy surcharges indexed to published factor costs, while others have simply passed through cost increases. We’ve offered our customers a choice--fixed increase or indexed. In any case, the extrusion industry cannot absorb energy cost risk. The margins won’t permit that, so the customers have to carry an increasing share of the energy risk."

The other uncertain issue that Brown cites is familiar to everyone--the volatile market "and what consolidation will occur as we move through a turbulent and uncertain period. We had been seeing some signs of bottoming in some of the major end markets and could even see glimpses of increased demand on the horizon. With the current economic turmoil, that’s out the window, and the extent and duration of the inevitable further market deterioration is uncertain. Today, the North American market is 10 percent below third quarter 2007 shipments, and 2007 was 18 percent below 2006. We’re looking at volumes typical of the early to mid-1990s. There’s clearly excess capacity and insufficient liquidity. While we’re in a strong position, it’s clear that others aren’t. Seven to eight extrusion facilities have already gone under this year. How many are yet to come?"

One week after the Rockdale announcement, Alcoa released its third quarter 2008 results, which illustrated the uncertainty about the market conditions. The company posted a 52 percent decline in its third quarter profit. Net income in the results fell to $268 million, down from $555 million in the third quarter of 2007.

"Recently, aluminum prices have fallen steeply and demand has softened further, while input costs remain high," said Klaus Kleinfeld, Alcoa’s president and CEO, in the results. "The resulting margin squeeze will have a greater impact going forward but will be somewhat mitigated by the easing of energy prices and a stronger U.S. dollar. We’ll continue to manage our business to keep it competitive in a turbulent global environment."

Kleinfeld pointed out that Alcoa will do this by conserving cash, stopping all non-critical capital projects, making targeted reductions and adjusting manufacturing capacity. "While we face volatile and uncertain markets today, longer-term trends will drive a rebound in global aluminum demand, and the forward market reflects underlying optimism on medium-term aluminum pricing," he noted. "During difficult times, we’ll examine opportunities across the industry to improve our competitiveness, use every lever to improve profitability and position the company to deliver stronger value when demand improves."

New applications
Despite a teetering market, the ways to use aluminum continue to grow. A well-known but increasingly popular application for aluminum is its use in decreasing the weight in various types of vehicles. According to the presentation, "Aluminum, Part of the Solution (Meeting the Challenges of Today and Tomorrow)," given by Doug Richman from Kaiser Aluminum for the Aluminum Association Auto & Light Truck Group, the automakers are starting to "lighten up."

For instance, GM will be using materials such as magnesium and aluminum to make its vehicles lighter and more fuel-efficient. Automakers like Volkswagen are opting to substitute aluminum or plastics for steel wherever possible to reduce weight, and Nissan will seek to cut the weight of its vehicles by an average of 15 percent over the next seven years as it seeks to improve fuel efficiency.

Richman pointed out that aluminum parts are used all over an automobile, from large parts like wheels, engine blocks and suspension to smaller components like instrument panel structures and seat frames. He noted that North American light vehicle aluminum content is forecast to grow to at least 374 pounds per vehicle, a number that was projected before the spike in fuel prices.

Currently, he said, 80-plus vehicles use more than 400 pounds of aluminum, including the Ford F-150, the Subaru Tribeca, the Nissan Altima and the Chevrolet Suburban.

With new Corporate Average Fuel Economy standards coming up in 2020, more automotive companies are looking at aluminum for weight reduction. In fact, Seoul, South Korea-based Hyundai Motor Co. says it can meet the standards five years early. Park Seong-Hyon, executive vice president, announced his intentions at the North American International Powertrain Conference in Chicago.

Hyundai believes the keys to meeting this goal include developing cars with lighter materials, as well as focusing on more sophisticated transmissions, applying next-generation hybrids and new technologies, such as Integrated Stop and Go. Turbocharging, gasoline direct injection, dual continuously variable valve timing and eight-speed automatic transmissions are among the other fuel-saving technologies that will be applied based on vehicle type and size, according to a company press release.

In the future, Brown also expects to see "additional work on the alloy side to accommodate increased recycled content and programs to develop approaches to effectively use scrap."

One of Hydro’s newest markets is "providing extruded structural framing for several utility-scale solar fields. These are large projects with complex project logistics and demanding structural and dimensional requirements."

All of these proposed and in-progress projects are a testament to the versatility of aluminum. It provides the ability to lighten a load while still maintaining strength and high performance, a valuable combination to many in the automotive and building industries. As a result, the current difficult market conditions should be just a blip on aluminum’s radar as it continues to rise in popularity. MM