While Ford has made inroads into increased usage of aluminum sheet in its vehicles, it is still "too early" to expect additional steel-to-aluminum announcements from other major automakers such as Toyota and General Motors, Sean Stack, CEO of US aluminum sheet producer and aluminum recycler Aleris International, said Tuesday.
Ford has announced plans to begin using a new type of aluminum from Alcoa in its popular F-150 pickup trucks later this year, a move aluminum producers hail as a precursor by automakers to replace heavier steel with more aluminum.
Ford began using aluminum sheet on the flat bed surface of the F-150 last year, replacing the use of sheet steel.
Aleris is undertaking a major expansion of its operations in Lewisport, Kentucky, enhancing the company's auto body sheet capabilities.
Stack told investors and analysts on the company's third-quarter earnings call that the $350 million project was on schedule to begin delivering product to customers in 2017.
"Work on the project is progressing as planned," Stack said. "The project is on time. We expect to deliver product in 2017."
Aleris broke ground about a year ago on the project aimed at expanding the company's capabilities in North America to produce wide aluminum auto body sheet for the automotive industry.
He said the first wave of key operational management and maintenance resources, both salaried and hourly, had been hired.
To date, the company has spent $110 million on the project, which includes additional heat treatment and finishing capabilities at the existing Aleris rolling mill, including a new wide cold mill and two continuous annealing lines. In all, Aleris expects to spend about $135 million on the project in 2015, and the company has signed contracts with vendors for more than 75% of planned expenditures.
"We believe this expansion will position Aleris to meet significant growth in North American demand as this industry continues to shift to lightweight aluminum to achieve required efficiency standards," Stack said.
The Lewisport expansion is one of two major ongoing projects for Aleris. The other is the company's new aluminum rolling mill in Zhenjiang, China.
During the July-September period, the mill made its "first material shipment to global aerospace customers," Stack said.
According to an Aleris statement, the company's Asia-Pacific segment produced 5,472 tons of aluminum plate, including aerospace plate, in the third quarter. Asia Pacific generated revenue of $24 million in the quarter.
In the fourth quarter, Stack said Aleris expects to see "continued demand growth in global automotive and aerospace, but continued destocking as people look to reduce metal exposure going into 2016."
North America scrap spreads are expected to be lower in the October-December timeframe due to lower aluminum prices, he added.
"Fundamentals are in place for continued growth into 2016, but uncertainties continue as to how global demand will play out," he said.
In the third quarter, Aleris recorded a $21 million loss from continuing operations, versus a $8 million profit a year ago. Through the first nine months of 2015, Aleris lost $54 million, compared to a loss of $38 million in the same period of 2014.
