Auto could shift to secondary metal: Novelis

Secondary aluminum could one day be automakers’ primary choice, a Novelis Inc. executive said.

"They are not in that position yet, but they are asking. They want to be," Marco Palmieri, senior vice president and president of Novelis North America, said Dec. 17. "And I really believe that in the medium- to long-term, that will become a reality."

Such a potential step change would likely be driven not only by automakers specifying recycled content rather than primary metal in their aluminum orders, but also by younger buyers who are increasingly aware of the benefits of recycling, Palmieri said.

In the meantime, Atlanta-based Novelis continues to try to improve its closed-loop recycling program with customers as it looks to recapture the roughly 40 to 50 percent of sheet left as scrap at stamping plants, Palmieri said. "That’s the core of our business model; it helps to reduce our environmental footprint, and we are making sure the carmakers get a high-recycled-content aluminum sheet all the time."

But expected automotive aluminum demand is so strong that a new, fully integrated hot mill might be called for in coming years, Palmieri said. "With the growth, (a fully integrated hot mill) will become necessary. We don’t see that in the short term. ... But if the growth continues to happen, it may become necessary," although any such decision is likely at least two to five years away.

One thing that Novelis isn’t concerned about in the short term is too much aluminum capacity chasing the automotive market, Palmieri said. "There will be a lot of capacity required to support the (auto) growth. Discipline will have to be there to avoid oversupplying the market in years to come. But it’s still early days to talk about that."