20140428-美银美林-Tighter_emission_standards_boost_aluminium_demand_21页_1mb

Aluminium Market Summary: Tighter Emission Standards Boost Demand

Core Content

The document outlines the evolving dynamics of the global aluminium market, highlighting the impact of tighter emission standards and the cyclical nature of demand. It emphasizes the role of the automotive industry as a major driver of aluminium consumption and the structural changes that could lead to long-term demand growth.

Main Points

Cyclical Demand Growth

• Aluminium demand is closely tied to global GDP growth, with a beta of approximately 2.
• The global aluminium market has transitioned from a supply surplus of 3.2mt in 2009 to a deficit of 590kt in 2014.
• The auto industry is a significant contributor to aluminium demand, accounting for 20% of the market.
• Global vehicle sales are expected to increase from 84.4m units in 2013 to 98m units in 2016, reinforcing demand for aluminium.

Structural Drivers of Demand

• Tighter emission standards are driving the adoption of lightweight materials, such as aluminium, in the automotive sector.
• Aluminium's lower density (2700 kg/m³) compared to steel (around 8000 kg/m³) makes it an attractive option for reducing vehicle weight and CO₂ emissions.
• The European Aluminium Association (EAA) estimates that aluminium content in vehicles could rise from 140kg to 160kg (or 180kg by 2020) in Europe if light-weighting is maximized.
• In the US, the automotive industry is also expected to increase aluminium usage, potentially reaching 156kg per vehicle by 2016.

Emission Standards and Regional Differences

• Emission regulations differ by region, with Europe's being more stringent and weight-based, making light-weighting with aluminium more challenging.
• CO₂ emissions per km are expected to fall globally, with non-compliant EU manufacturers facing penalties of €95 per gram of CO₂ by 2020.
• Steel mills are responding to the threat from aluminium by developing advanced high-strength steels that can reduce vehicle weight without full substitution.

Cost and Practical Limitations

• Aluminium is more expensive than steel, with a cost of €2.53/kg versus €0.91/kg for steel.
• Cost is a major drawback to widespread adoption, and car manufacturers are limited in how much they can increase aluminium usage due to economic and technical constraints.
• Luxury car producers tend to use more aluminium than mass-market manufacturers due to higher willingness to pay for weight reduction.

Demand Projections

• The auto industry is projected to increase aluminium demand by 2.5mt over 2.5 years.
• By 2016, the global car industry could boost aluminium offtake by almost 2.45mt, compared to a baseline of 1.9mt.
• This supports the view that the aluminium market is moving into deficit, driven by stronger demand and tighter supply.

Key Information

• Aluminium demand and GDP growth correlation is strong, with a beta of 2.
• Light-weighting is a key structural trend in the automotive industry, supported by emission regulations.
• Aluminium usage per vehicle is expected to increase from 140kg to 160kg in Europe and 156kg in the US by 2016.
• Emission penalties in the EU are a strong motivator for car manufacturers to reduce vehicle weight.
• Steel industry adaptation is occurring through the development of advanced materials.
• Cost remains a challenge, but the trend towards light-weighting is expected to continue.
• Global car sales growth is expected to reach 98m units by 2016, contributing to increased demand for aluminium.

Conclusion

The global aluminium market is experiencing a fundamental shift, driven by cyclical demand recovery and structural changes in the automotive industry due to tighter emission standards. While the cost of aluminium limits its full adoption, the trend towards light-weighting and the need to meet regulatory requirements are expected to increase demand significantly. The document forecasts that aluminium demand will rise by 2.5mt over the next few years, leading to a market deficit and supporting the view that the aluminium market is improving.