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Tepid demand for metals, particularly in China recently, sent copper below a seven-month low of $7,500 a tonne. Copper prices have moved forward since on signals of improved inquiries from Chinese importers and users. But overall, copper has taken less beating than aluminium, which remains under twin pressure of surplus production and mounting warehouse stocks with the London Metal Exchange and the Shanghai Futures Exchange. The problems besetting aluminium are not going to go away too soon, the pace of laying off of smelting capacity across the globe falling short of requirement.
"The world aluminium industry is caught in difficult times, with over 30 per cent capacity rendered unviable at current prices. At the same time, with copper costing close to four times more than the white metal and the automobile industry in developed and emerging nations pressured by law to make more fuel efficient vehicles leaving very low traces of carbon footprint have opened up many new application opportunities for aluminium," says Vedanta Aluminium Managing Director Sushil Roongta. By an uncommon coincidence, here is one who till the other year a leading light of steel industry, is now part of a global campaign to give a push to substitute use of both the ferrous metal and copper by aluminium.
High fuel prices and also environmental concerns are the principal drivers in the move to lightweight vehicles from cars to trucks. Lesser the weight of a vehicle, the better is its fuel efficiency. Like for every 10 per cent reduction in vehicle weight, up to seven per cent improvement in fuel efficiency is achieved. Government intervention besides, buyers themselves are also insisting on lighter vehicles. In a path-breaking move, the Obama Administration is pursuing a programme of improving the fuel economy of vehicles and reduction in greenhouse gas emissions, which is to save consumers over $1.7 trillion at petrol stations. The corporate average fuel economy (CAFE) standards in the US, born in response to the Arab oil embargo of 1973, have been revised to add teeth, the last revisions came as recently as August 2012. Oil shocks on several occasions in the past and unpredictability of the OPEC response to a crisis situation will also explain the progress in biofuel production and extraction of oil and gas from shale.
Globally, the transport sector accounted for nearly 30 per cent of the total aluminium use of close to 47 million tonnes (mt) in 2012.The use percentage varies from country to country. In India, it is 14 per cent where, however, the transport segment, according to Roongta, holds much promise. This is in spite of production setbacks across the automobile industry - from passenger cars to medium and heavy commercial vehicles. Whether it is the US or Europe, the economic slowdown continues to negatively impact automakers. World aluminium use last year was up 4.5 per cent, which if China is excluded, where consumption growth was nine per cent, would amount to a measly 1.1 per cent. No wonder then that the volume of metal used in cars fell in 2012. What is encouraging is that difficult times have not proved to be a deterrent for marquee to mass automakers from pursuing the goal of light weighting vehicles, in the process creating increasingly large scope for substituting steel, mainly by aluminium.
As we go forward, we will see greater focus on aluminium-intensive vehicles, with the light metal replacing steel in more and more areas - from body panel to chassis to bonnet and tailgate. In the 12 years to 2012, aluminium used in a car produced in Europe rose by 90 kg to 140 kg. The 2020 European target is to take it to 180 kg a car. In the US a car made now will have close to 160 kg of aluminium components. The US-based Aluminium Association says global automakers are likely to lift aluminium content in a car to 249.5 kg by 2025. The volume of North American use of aluminium in cars is estimated to rise 66 per cent to 3.7 mt by 2025. The Indian automobile industry has much catch-up to do.
