ANALYSIS-New US auto standards should boost aluminum demand

* Aluminum has advantages for making vehicles lighter * Aluminum use to jump to 11 pct of U.S. vehicle weight * Molybdenum use will also climb in engine die casts NEW YORK, May 22 - Aluminum demand will get a lift as auto manufacturers design and build lighter passenger vehicles to comply with President Barack Obama's plan to cut U.S. auto emissions, but the ramping up process will take several years. "Looking at it from a long-term view, yes, this is definitely a positive for aluminum consumption. But it's not going to happen overnight," said Gayle Berry, metals analyst at Barclays Capital in London. Obama this week proposed the strictest plan ever to increase federal fuel standards for passenger cars and trucks. The rule, effective in 2012, would require the U.S. passenger vehicle fleet to average 35.5 miles per gallon (6.6 litres/100km) by 2016, saving 1.8 billion barrels of oil. ID:nN19433189 Vehicles must be lighter to meet those goals. Analysts see aluminum as the biggest base metals beneficiary. Materials such as plastics, carbon fiber and light-weight steel will also see greater use. But many give aluminum the edge because of its light weight and characteristics such as strength, flexibility, anti-corrosiveness and recyclability. "A WHOLE NUMBER OF ADVANTAGES" "Pressure to be more fuel efficient benefits aluminum versus other materials. We see the outlook for more fuel efficient vehicles as clearly positive for aluminum," said Jorge Vazquez, vice president of aluminum intelligence at Harbor Intelligence in Texas. Engineers have encountered issues with composites and carbon fiber in so-called critical structures and have not always met safety standards. So their use has been limited. Some light-weight steel has usurped certain areas, but aluminum's anti-corrosive property has advantages over steel which needs protective coatings, like galvanizing. "There are a whole number of advantages and that's why aluminum continues to gain share away from steel," said Berry. Analysts predict that trend will continue and that heavier weight steel will lose out to aluminum and plastics. For years, aluminum producers have worked closely with auto makers to promote the metal, which now dominates applications like vehicle bumpers, wheels, seat holdings, and many others. By 2009, aluminum reached an all-time high of 8.6 percent of the average North American vehicle weight, said the Aluminum Association, which expects that content to grow to an average 11 percent of car and light truck weight by 2020. "IT'S STILL EARLY DAYS" "If Obama's plan is accepted, we believe that 11 percent will be easily reached and above that by 2020," said Vazquez. Aluminum could make further headway in engine castings, moldings, and mounts now made from heavy cast iron. For much hotter diesel engines, Catherine Virga, senior base metals analyst with CPM Group in New York, said molybdenum is used in engine die casts and may therefore see its use go up. Adding molybdenum maintains a strong and heat resistent engine block, but thins its gauge and therefore lightens it. Lower emission standards will also likely promote use of platinum, palladium and rhodium in catalytic converters. Once more electric and hybrid cars hit the road copper consumption should also increase, with both types of autos requiring more wiring than today's average vehicle. Hybrid cars use nickel hydride batteries, but other types of batteries, like nickel/cadmium and lithium ion are making inroads and could boost demand for nickel and those materials. Tom Pawlicki, analyst at MF Global, noted that nickel/zinc batteries have been reported to weigh 30 percent less with 30 percent greater efficiency than nickel hydride batteries and have greater recyclability than lithium-ion batteries. "But it's still early days. Vehicle manufacturers don't make raw materials decisions overnight. It takes a long time to draw up plans for these things," said Berry, adding that it will also take several years for the rule to take effect. source：news.alibaba.com