On the heels of the COP21 UN climate conference, the automotive industry's attention has turned to aluminium automotive body sheet (ABS) — a means toward creating lighter, more fuel-efficient vehicles. Our aluminium research team examines the implications of sharp ABS demand growth over the near term.
With CO2 emissions limitations front-of-mind for many governments as the COP21 comes to a close this week, the market for lighter, more fuel-efficient cars is poised for renewed interest. As manufacturers rush to adapt to stricter emissions standards, our analysts forecast double-digit demand growth for aluminium automotive body sheet (ABS) in the next five years.
The granular demand data — particularly in developed markets — from our model-by-model analysis shows Europe and the US leading the way in ABS consumption in the near term, with the SUV sector a key driver for growth in intensity and output. While Europe favours a "lighter fleet" model linked to average mass, the US regulations are "footprint" based, with fixed targets based on individual vehicles.
While we expect Europe and the US to reach the same rate of g/km of CO2 by 2025, the pace of ABS adoption and demand will vary among countries due to global differences in CO2 regulations. We forecast demand to become more robust post-2020, as gradual policy changes takes place and more countries move toward aluminium automotive technologies.
On the production side, output remains closely linked not just with demand, but also with original equipment manufacturer (OEM) supply considerations. In terms of the aluminium rolling industry's ability to maintain quality and output with growing demand, our analysis suggests there is sufficient cold-rolled capacity out to 2020 without creating any tightness within related markets, including can body sheet, from whose lines most current ABS production originates.
Anticipating the need for higher volumes and greater efficiency, the rolling industry is investing heavily in new technologies, such as Alcoa's Micromill, which could significantly reduce cost and narrow the gap between high-strength steel and ABS. Such a development could prove to be a game-changer within the sector, giving OEMs a strong incentive to switch to ABS.
With all of this robust growth, sorting and processing scrap will remain a post-manufacturing challenge as it becomes a significant part of the raw material supply chain.
As well as being available as part of our subscription service, our two-Insight series, "Automotive aluminium sheet: the road ahead" is also available for purchase independently as part 1 and part 2.
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