When I look over the news of the day in the nonferrous segment, three things stand out: good times, advancements and illegal activity. Let’s look at some examples of each.
Our desire is always to emphasize the good news, so that’s where we start. The stock pickers are very bullish on Alcoa in 2018, and the share price has already gone up 30% in just a month (as of Jan. 10).
Ducker Worldwide is predicting that aluminum in vehicles is and will continue to be on the rise. They predict that aluminum doors will go from less than 5% in 2015 to 20% of the North American fleet in 2020. Hoods are predicted to be 71% aluminum by 2020 compared to 50% in 2015. Bumper beams will go from 33% in 2015 to 54% in 2020.
Facilitating this increase in automotive usage is the recent announcement by Novelis that its highly formable, heat-treatable alloy (Advanz™ 6HF - e/s200) is now available in North America. This alloy has been successfully applied in Europe, and it crosses over a bit into the advancements category.
Also, Aleris recently announced the opening of a $400 million auto-body sheet production center in Kentucky, which is its first in North America able to finish aluminum auto-body sheet. This expansion included two continuous annealing lines and a wide coil mill.
With Alcoa’s recent decision to close a Texas smelter and divest a smelter in Italy, primary aluminum production will happen elsewhere. To that end, the government of Guinea has approved a Chinese investment of more than $2.8 billion in a bauxite mine, an aluminum smelter and refinery. Guinea has about one-third of the known bauxite reserves, but development has been slow due to riots and unrest.
At least partly due to the fact that investors have become bullish on commodities, copper has had a good price run over the past year, increasing 31%. Copper demand will be driven by electric vehicles, solar and wind power, energy-efficient appliances, and the auto and construction industries. The nonferrous metal has historically been a good market indicator.
Additive manufacturing continues to be part of what’s new. One of the recently announced advancements is from Vader Systems, which is using molten aluminum droplets rather than powder. Because this process is 10 times less expensive than powders, it (when commercialized) will make additive manufacturing affordable to an expanded market, including automotive.
Battery technology is definitely a growing area – in general and for nonferrous in particular. This month’s article from CAN-ENG talks about the role of nonferrous materials in electric vehicles. Researchers in China have reportedly developed an aluminum-graphene battery that can be fully charged in five seconds and last for two hours. It has a better operating temperature range and can retain 91% of its capacity even after 250,000 charge/discharge cycles.
Other advancements include a move to make aluminum production greener because, although valuable for lightweighting, aluminum is very energy-intensive to produce. New alloys, such as aluminum-scandium, are being developed for various high-performance applications.
Not so Good
We have discussed this relative to rare-earth metals in the past, but there are new concerns about shortages in “technology metals” such as cobalt, lithium and manganese. These minerals are crucial for batteries used in electric vehicles. An article “Will Tesla Die for Lack of Cobalt?” in The Wall Street Journal believes the market will take care of the problem.
Primary aluminum is being produced all over the world, especially since little to none is smelted here in the U.S. Domestic producers of finished aluminum products, however, are taking exception to the importation of semi-finished goods. In recent months, antidumping cases have been filed targeting aluminum foil, extrusions and sheet.
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