Japanese aluminium fabricators boost output in US to leverage demand from auto industry

Big names in Japan’s aluminium fabricating industry such as Kobe Steel and UACJ are giving tough competition to the likes of Alcoa and Novelis by beefing up output in the United States. Their strategic move is aimed at leveraging rising demand for aluminium in the world’s second largest automobile market- the US.

UACJ, Japan's biggest rolled-aluminium products manufacturer, started producing sample aluminium sheets for automobiles last month in their Kentucky plant, which they built with their Dutch partner Constellium at a total cost of $150 million. The plant has a production capacity of 100,000 tonnes per year.

The company also acquired SRS Industries, a Michigan-based US manufacturer of automotive aluminium structural materials, earlier this year at an estimated total cost of $155 million.

"We are also considering an expansion of the joint venture with Constellium, possibly adding two more finishing lines to triple capacity to meet rising demand," said UACJ Senior Managing Executive Officer Takayoshi Nakano in a recent interview.

Nakano said his company aimed to capture about 20 per cent of the market share in the US aluminium automotive sheet industry.

"Our expectation is the trend in the US and Europe to use aluminium for auto bodies and structural frames will eventually spread to other areas like China and Southeast Asia where we want to take the lead," he added.

Kobe Steel, another aluminium fabricator from Japan, said it will invest $46.7 million in May to build a plant in Kentucky where it will make aluminium components for car frames and bumpers. The company also has plans to build another plant for making aluminium automotive sheets in the country.

"We are still looking to invest in the US market to make aluminium sheets, although the timing is not known yet," Kobe Steel President Hiroya Kawasaki said at a news conference last week.

There are other rolled-aluminium products makers in the US who are mulling over the idea of output enhancement. The move will intensify competition not only among the US aluminium biggies but also among the steelmakers who are all vying for a pie of the automotive aluminium sheet market in the country.

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