Constellium shifts focus to the booming auto aluminium industry in U.S.

The wider use of aluminum in mass-produced American cars and trucks, led by Ford Motor Co. ’s F-150, is a “transformational” event that has led Constellium NV, one of the world’s biggest aluminum companies, to shift its focus to the U.S. from Europe, Chief Executive Pierre Vareille said in an interview.

Car makers are increasingly using aluminum instead of steel as they try to meet new government fuel-efficiency standards by making cars lighter. By 2025, 18% of all vehicles in the U.S. are expected to have all-aluminum bodies, compared with less than 1% now, according to Ducker Worldwide LLC, a consulting and market-research firm.

“In Europe, for the time being the cars that have switched to aluminum are high brand,” Mr. Vareille said. “In this country, it is the high [volume] sellers, and it has been very brutal, very quick.”

Amsterdam-based Constellium, a spinoff of Rio Tinto PLC’s Alcan unit, expects demand for sheet aluminum from the U.S. auto industry to grow to 1 million tons a year by 2020, from 100,000 tons a year now. It sees an increase to 600,000 tons from 200,000 tons in Europe over the same period.

There are only four companies with operations in the U.S. that can supply the aluminum sheet Detroit needs: Alcoa Inc., Novelis Inc., Logan Aluminum Inc. and Constellium. There is so much demand for their metal that they are already getting auto makers to accept seven-year and longer contracts.

Constellium, which also makes aluminum products for the beverage and aerospace industries, agreed to acquire a private Alabama company, Wise Metals Intermediate Holdings LLC, in October in a deal valued at $1.4 billion. Wise supplies aluminum for the beverage- and food-can industry.

Constellium will invest up to $750 million in the Alabama operations by 2022 and produce up to 200,000 tons of sheet a year for the auto industry. It plans to increase Wise’s total hot-mill capacity to more than 700,000 tons from 450,000 tons. Constellium also is building a $150 million facility in Bowling Green, Ky., to produce 100,000 tons of sheet aluminum a year.

With the investments, the share of Constellium’s sales that are from U.S. customers will increase to 30% from 14%, Mr. Vareille said.

The recent collapse in oil prices won’t affect the demand for sheet aluminum, Mr. Vareille said. Indeed, lower oil prices might mean that Americans buy more trucks and SUVS, which often have more aluminum than smaller cars, he said.

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