European rolled aluminium product demand seen up in 2016-Novelis

U.S.-based Novelis expects a 3 percent rise in rolled aluminium product demand in Europe in 2016, despite the knock-on impact of sluggish growth in China, its European head said. This would be down slightly from the 4 percent increase in aluminium product growth expected in 2015, Erwin Mayr, Europe president for the rolled aluminium products group, told in an interview for LME Week at the London Metal Exchange.

"I expect the positive trend to continue in 2016, although the slowdown in China could reduce Chinese demand for imported European products containing aluminium," he said.

Aluminium drink cans and the automobile sector are expected to remain the main growth drivers in Europe in 2016 after strong performances in 2015, he said.

"We are seeing especially strong demand for drink cans in Germany where some of the largest discount supermarkets have returned metal drinks cans to their shelves," he said.

Retailers Aldi and Lidl extensively returned beer and other drink cans to their supermarkets this year after previously avoiding them because of a German deposit scheme on empty cans. The deposit scheme was introduced in 2003 and the two discount chains then removed beer cans from their product range because of the extra costs associated with the programme. But the greater popularity of canned over bottled beer created a change of thinking among the retailers.

Good demand is also seen coming from the automobile sector despite the crisis at Volkswagen. If consumers turn away from Volkswagen they would buy cars from another manufacturer, not stop buying vehicles, he said.

"Because of the crisis, more may have to be done to reduce emissions including lighter construction so the crisis could even in the medium/long term be positive for aluminium demand."

Novelis produces about 1 million tonnes of rolled aluminium products in Europe annually with production and recycling operations in Germany, Italy, Britain, France and Switzerland. "We will work at full capacity this year," he said.

Scrap availability remains good despite the low aluminium price, with collection systems for garbage recycling in Europe helping to generate higher scrap supplies. In October 2014, Novelis inaugurated a $258 million aluminium recycling plant in Nachterstedt in Germany to produce 400,000 tonnes of aluminium annually using scrap. A line at Nachterstedt to produce 120,000 tonnes of rolled aluminium for automobiles is set to be officially opened in November with Jaguar Land Rover and BMW as launch customers.

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