The automotive industry and construction industry support the US aluminum extrusion market growth unabated

Although the US aluminum extrusion market has slowed down in recent years after strong growth over the years, it still maintains a fairly high level.

Timothy Hayes, a Lawrence Capital Management (LCM) analyst based in New York City, predicted that the US aluminum extrusion market is still in a good year. In fact, after the US aluminum extrusion market experienced a recession in 2008-2009, it has entered a high-level period in recent years.

At the same time, Robert Peacock, President of Almag Aluminum Co. of Ontario, Canada, pointed out that in recent years, the demand for extruded aluminum in Canada has been stronger than in the United States, and it is estimated that it will continue to become active after 2017. He believes that the main reason is that the weakening of the Canadian dollar against the U.S. dollar exchange rate supports the continued busyness of the local customer business, and the local user demand is also more active.

Although the US aluminum extrusion market is still growing, it is difficult to predict how long it will last. According to statistics, in 2015, the delivery volume of extruded aluminum in the United States increased by 5% compared to 2014 to 5.5 billion pounds (equivalent to 2.5 million tons). It is estimated that the annual growth rate in 2016 will slow to 4% and reach nearly 5.7 billion pounds, but some industry figures predict that this year's growth rate is only 2% to 3%.

Point of recession

U.S. manufacturing is entering the cusp of recession. According to the data provided by the Federal Reserve, not only the gross industrial product of the first half of the year was lower than 1% of the same period of last year, but also according to the Institute of Supply Management (ISM), the Purchasing Managers Index was also below 50, which means that the manufacturing industry shrink. However, the US auto industry continues to grow. Although the construction industry is not as strong as previously forecasted, it is still on an upward trend. At the same time, according to the US Bureau of Investigations and Statistics, construction spending in the first half of this year was the highest level since October 2008, an increase of 10.4% year-on-year, only about 5% lower than the peak in the first half of 2006. In addition, the chief construction economist of the American Construction Association (AIA), Kermit Baker, pointed out that the main indicator of construction activity in the United States, the Construction Expenditure Index (ABI), recently hovered slightly above and below the demarcation line. .

Judging from the overall economic operation, since the beginning of this year, the economic situation has tended to fluctuate at the beginning of the year, oil prices have fallen, and the consequences of uncertainties such as the declining value of the US and other stock markets may also affect the expected progress of the economy and market outlook. In the middle of this year, it was predicted that non-residential construction growth rates in the United States in 2016 and 2017 were 8.3% and 6.7% respectively.

According to predictions of related industry insiders in the United States, the extruded aluminum market will tend to grow steadily. This includes soft extruded aluminum, which is mostly suitable for industrial applications. It also includes extruded aluminum for the aerospace industry and military hard alloys. This is mainly due to the continued growth in the manufacturing rate of the commercial aerospace industry, and is expected to continue to do so in the coming years. However, the production of military aircraft has generally stabilized. It is estimated that the growth rate of hard alloy extruded aluminum in 2016 will be 3% to 4%, which is approximately the same as that in recent years.

About one-third of this year's aluminum extrusion growth comes from the automotive industry. This is mainly due to the fact that in addition to the increase in car production, the extruded aluminum consumed by each car also tends to increase. Looking into the next 5 to 10 years, it is possible that the demand in the auto market will continue to grow strongly. Among them, in 2015 North American market produced 17.4 million cars and light trucks. It is estimated that production will reach 18.2 million units in 2016 and further increase to 19 million units in 2020.

Newly-produced cars continue to be lightweight

In order to reduce the weight of the car, a large amount of extruded aluminum is used in passenger cars and light truck systems, including a large number of extruded profiles for emergency management systems as buffers, a large number of extruded aluminum tubes for body and structural applications, and a large number of extrusion plates. Bars and rods are used in explosion-proof braking systems. Automobile manufacturers continue to seek opportunities to increase light vehicle production, and accordingly, the above-mentioned accelerated demand for aluminum extrusion is expected to accelerate, which means that more stringent fuel efficiency standards that will take effect in 2025 will be achieved.

According to information provided by relevant industry sources, the average aluminum extrusion capacity per light vehicle in North America has increased to 31 pounds in 2015, which is an increase of 6 pounds from 25 pounds in 2012 and is expected to reach 38 pounds by 2020. Afterwards, it will continue to increase. The main varieties added include extruded profiles and pipes, mostly used for buffers, roof rails and operating panels.

Although the use of extruded aluminum in the automotive industry has rapidly increased, it is still slightly inferior to aluminum. Aluminium plates are mainly used for car body construction, and the industry has increased its hardness in order to compete with steel. However, according to industry insiders, during the 10 years from 2015 to 2025, about 90% of the aluminum consumption in the automotive industry grew from aluminum sheet and aluminum sheet, while the rest was aluminum extrusion products. The main advantage of extruded aluminum in the automotive industry is the ability to produce complex and tight tolerance profiles. Moreover, these extruded aluminum will be used in place of a large number of machined parts that must be connected together. The use of separate extruded aluminum parts in this area not only reduces the weight but also helps the original equipment manufacturer to reduce costs. In other words, some auxiliary connection products such as bolts, nuts and brackets can be cut. And we see that some large vehicles, such as pick-up trucks, sports cars, crossovers, and luxury cars, etc., will be very likely to be converted into extruded aluminum.

New vehicles increase rapidly

This year, new types of vehicles increase the use of extruded aluminum rapidly. Not only was the aluminum-intensive Ford F-150 pickup truck completed for the first time in 2016, but the Cadillac CT6 also supported the use of extruded aluminum in the first half of this year, and Ford will also start the aluminum-intensive F250 supercharged pickup truck program before the end of this year. GM is also expected to redesign its Chevrolet pickup in 2017 or 2018 and will use more aluminum than current models, including extruded aluminum.

At the same time, relevant people in the industry also noticed that some very high-strength 7xxx extruded aluminum was used in the aerospace industry in the past, but it is also used in automotive parts such as door girders. The future will shift to the development of higher strength 6xxx series alloys and compete with the 7xxx series products. Although more producers have the ability to produce 6xxx aluminum alloys, there is a significant degree of usability issues. However, anyway, the cost of the 7xxx series alloy application will be reduced. The extruded products produced each year by the aluminum industry not only continuously increase their strength and toughness, but they also have the technology to produce thinner-walled extrusion products and even offer potentially lighter products.

However, the demand for extruded aluminum from manufacturers of heavy-duty trucks and trailers tends to slow this year. According to an extruded aluminum manufacturer, this is a very traditional cyclical market, and large annual fluctuations are not uncommon. The biggest drop was in heavy trucks, which has fallen by 25% since the end of last year. Production cuts have caused truck inventory to continue to decline, and it is expected that it will be difficult to achieve the factory expectations this year.

The demand for the trailer market is relatively large, accounting for about 15% to 20% of the market share. In fact, the trailer market is more active than expected. Although the market demand has been suppressed, the weight of vehicles is tending to be lighter, and the corresponding consumption of extruded aluminum still tends to increase. Although the order has declined, the manufacturer also has a large number of orders that have not yet been delivered. Therefore, demand can still be supported in the first half of this year, but the annual production of trailers may decline by about 3%. It is expected that the market will recover by 2017.

Construction support

Although the U.S. construction industry's spending index is somewhat obscure, the structural and construction industries continue to actively support the demand for extruded aluminum. It is estimated that consumer aluminum extrusion will increase by 6% to 2.1 billion pounds in 2016, up from 8% in 2015. . This is mainly due to the continued prosperity of residential construction, compared with non-residential construction, which is less robust, but it is doing better now than before. This is good news for extruded aluminum, because the structure and construction industry is their largest user market. The extruded aluminum is lighter, so the panel has less pressure at the top. And extruded aluminum also has a lower life cycle cost.

The green standard for a large number of buildings has been added, which is the biggest extra point for extruded aluminum manufacturers. Energy and Environment Design and Command (LEED) and Energy Star support the application of sun shadows and shutters, both of which use extruded components as a means of controlling energy use. According to Jeffrey Henderson, the new president of the Aluminum Press Association (AEC), the association will soon publish a description of the extrusion environment product according to LEED v4. Another promising area for this year will be the application of solar energy, especially the recent increase in tax deductions for investment, but the impact of aluminum extrusion manufacturers this year is still uncertain.

Last year, the US solar energy industry increased by 10%, in part because of concerns that consumers of tax deductions will drive projects to take into account the cost of installing solar energy. According to the figures provided by the Solar Energy Industry Association (SEIA), solar photovoltaics or panel installations reached 7,286 megawatts in 2015, including a 66% increase in residential facilities and a 6% increase in utility-scale installations. However, it is clear that the demand this year is relatively flat.

At the same time, the analyst of British Metals Herald Buchanan said that the production capacity of extruded aluminum is basically in balance with the supply and demand of aluminum ingots, and this year is still the case. She noticed that the aluminum market in North America grew by 5% last year and is still relatively abundant this year, especially considering the import rate. It has been observed that due to the support of electricity assistance, not only China's government subsidy aluminum ingot prices are quite low, but also offers from the Middle East and Iceland are lower than North American products.

The domestic aluminum extrusion capacity in the US is slightly in short supply, but the non-automobile delivery time is still relatively short, only about 4 to 6 weeks. However, the industry is not too worried about the supply of aluminum extrusion products related to automobiles, especially the production of 12 new presses with a diameter of 12 inches or less in the past year, and it is expected to be more in the near future. For example, Bonell Aluminum recently announced that it will build a new extrusion line in Niles, Michigan, and will complete production in 2017.

[More detailed data, please use steel data]