Novelis Is The Sheet: Automotive Aluminum Finally Sees Producer Dollars

A revolution has been quietly going on in the aluminum industry.

While growth has been broadly positive across most sectors, rolled aluminum sheet used for automotive applications has been experiencing double-digit growth.

Novelis, the world’s largest roller of aluminum sheet for the automotive industry, estimates the total tonnage used in the sector at about 450,000 metric tons, but is anticipating that 25% annual growth will see that figure tripled by the end of the decade.

As a result, rolling aluminum mills in that sector are finally taking the step of investing in new aluminum production capacity. The shortage of automotive sheet capacity in Europe has been a feature for some years, so Novelis’ announcement that it is converting some of its capacity at Gottingen, Germany, to produce automotive sheet is hardly ahead of the market, but will come as welcome news to consumers.

According to a Just-Auto.com article, Novelis currently produces automotive sheet in Europe at its Nachterstedt, Germany, and Sierre, Switzerland, facilities. Initially, 20,000 tons will be manufactured annually in Gottingen, while a second planned phase will expand capacity to 40,000 tons annually.

Nor is Europe the sole beneficiary of the firm’s response to rapidly rising demand - Novelis is adding capacity in North America at its Oswego, New York, plant, which will see an additional 240,000 tons and a new plant under construction in Changzhou, China, will have a capacity of 120,000 tons.

At the same time, Novelis is investing heavily in raising recycling rates, increasing the percentage of its rolled sheet made from recycled aluminum from 33% in 2011 to as much as 80% by 2020. While such high recycling rates will enhance the firm’s environmental credentials, especially with the automotive industry (where the recyclability of cars in Europe is being mandated), more importantly for the bottom line, the move will secure Novelis’ supply base.

The firm is not vertically integrated, buying its slabs from Rusal, Rio Tinto Alcan and Emirates Aluminum. Boosting the use of recycled aluminum secures the firms’ supply chain as if it was operating primary smelters.