“Aluminum Cars Take Heat from ArcelorMittal’s CEO” – Wall Street Journal, 17 June 2014

Europe, China, and the US have all cracked down on fuel economy standards; President Obama has introduced new regulations to improve the average fuel economy by 54.5 miles per gallon by 2025. Automobile companies, like Ford, are responding to the new regulations by creating a new line of F-150 pickups made out of all-aluminum bodies, and many other US car manufacturers are following suit. However, Luxembourg-based ArcelorMittal, the world’s largest steel company, is an aluminum naysayer, contending that aluminum isn’t actually lighter than new designs of steel.

Due to US and European automotive companies’ move to aluminum, ArcelorMittal is now looking to expand and invest in developing economies, like China, Brazil, Mexico, India, and the Middle East, where steel is still heavily used.

According to Ducker Worldwide, 18% of vehicles will be produced entirely from aluminum by 2025, which will surely help the automotive industry to meet Obama’s proposed fuel economy standards. Though more expensive, aluminum is argued to be a lighter metal, which will thusly help to improve fuel efficiency; in the US, manufacturers’ fuel economies must increase by five percent each year until the 2025 mark. However, as ArcelorMittal presents, the flip side to manufacturing the same cars with all-aluminum bodies is to manufacture smaller cars out of steel, which was save the car industry the added expense of aluminum.

ArcelorMittal’s focus right now is on China, where it just opened VAMA, its first steel-manufacturing plant and a multi-million dollar undertaking with Hunan Iron & Steel Co. Through VAMA, the Chinese automotive industry will have access to 1.5 million tons of steel per year, an industry that has grown by 16% since 2013.

According to ArcelorMittal, the statistic that aluminum is 30% to 40% lighter than steel is only accurate if you’re equating aluminum to steel made in 2005. Steel produced in 2014 is harder and lighter than previous versions; current forms of steel have been refined using a distinctive heating and cool process. However, the Ducker Worldwide study still projects that a majority of automobiles will be manufactured out of aluminum parts by 2025.

Developed and Written by Dr. Subodh Das and Tara Mahadevan

June 17, 2014

Phinix LLC

Copyright 2013. All rights Reserved by Phinix, LLC.

www.phinix.net    skdas@phinix.net

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“India became 3rd-largest economy in 2011 from 10th in 2005″ – Times of India, 30 April 2014

According to a report released by the International Comparison Program—presented by the Development Data Group at the World Bank—in 2011, India’s economy grew to the third largest in the world from placing at the 10th largest in 2005 and is now ahead of Japan. The US is still the largest economy, succeeded by China.

China, India, and Indonesia’s rankings, in comparison to the US, doubled; Brazil, Mexico, and Russia grew by a third or more. In 2011, worldwide production of goods and services amounted to more than $90 trillion, and almost half came from low and middle-income countries. Six of the world’s 12 largest economies have been classified as middle-income countries: China, India, Russia, Brazil, Indonesia, and Mexico.

The six biggest middle-income economies contributed 32.2 percent of the world GDP, while the six biggest high-income countries—US, Japan, Germany, France, UK, and Italy—contributed 32.9 percent.

China and India are growing rapidly and, with the exclusion of Japan and South Korea, account for two-thirds of the Asia and Pacific economy. China and India also account for almost 80 percent of investment expenditure in the same Asia and Pacific region.

Rise of middle-income countries will continue to provide the largest export markets for high-income countries, benefiting the world economy and reducing global income inequality.

Developed and Written by Dr. Subodh Das and Tara Mahadevan

May 2, 2014

Phinix LLC

Copyright 2013. All rights Reserved by Phinix, LLC.

www.phinix.net    skdas@phinix.net

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“Steel Imports Into US Surge” – Wall Street Journal, 26 January 2014

Due to a global oversupply and an increase in demand by automakers, importing steel has become the cheaper option for some US steel buyers. The price difference between domestic steel and international steel is widening—the US is becoming more expensive—and has spurred a jump in the number of imports into the US. The average gap between US and China’s steel has risen to $159 per ton. In January 2014, imports reached 3.2 million tons, compared to 2.6 million tons in January 2013, a 23% increase.

Last spring, due to the demand of steel by car manufacturers and the growing construction market, US steel producers increased prices—previously, costs had been fairly low. For example, the current average price for a roll of benchmark hot-rolled coil in the US is $676, while China’s current average for the same product is $540. Steel production in China rose by 7.5% from 2012 to 2013, nearing 780 million tons, seven times more steel than the world’s number two manufacturer, Japan, generated in the same year.

The surplus of steel provoked a surge in prices for big steelmakers, such as the US, Brazil, and Germany. While US manufacturers have been profiting from increased pricing, the mounting number of imports will likely cause these prices to fall.

More producers on the East Coast are now importing steel. Two years ago, a major East Coast steel mill—operated by RG Steel LLC—closed as a result of steep labor costs and reduced demand. Conversely, buyers in the South and Midwest are not importing as much steel, and still purchase their supplies from neighboring mills, which allows them to bypass expensive shipping costs.

The US has always depended on imports; however, that dependency might increase this year. America uses almost 108 million tons of steel per year—25% of that is imported from abroad, while the rest is produced domestically. If it remains cheaper to buy foreign steel, then imports are expected to increase to approximately 30% by the end of 2014. Imports will be the main factor in why US steel prices drop this year. Yet, analysts expect US pricing to still cycle through.

Developed and Written by Dr. Subodh Das and Tara Mahadevan

May 2, 2014

Phinix LLC

Copyright 2013. All rights Reserved by Phinix, LLC.

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Novelis Sustainability Report 2013

In 2011, Novelis decided to strengthen their company by increasing their business’ sustainability and innovation. The most important component of their new vision is to use 80% recycled aluminum in all their products by 2020. Once they reach this goal, they will then halve their products’ embedded carbon.

In 2011, when Novelis set their intended goals, they used the average of fiscal years 2007-2009 as their standard. Some of their 2020 goals include:

  • Increase recycled metal content from the current 43% to 80%
  • Reduce energy usage by 39%, from the current 10 GJ/mt to 7.6
  • Reduce water usage by 25%, from the current 3.1 m3/mt to 2.7
  • Halve the absolute amount of GHG emissions, from the current 18 M mt to 11
  • Have zero landfill waste from the current 55.6 K mt

While the company is headquartered in Atlanta, George, there are also facilities in Sao Paulo, Zurich and Seoul, serving the beverage can, automotive and high-end specialty markets. There is a rising demand for aluminum in these markets, especially the automobile industry, since 2010 when Obama obligated car manufacturers to double their new-car average fuel economy by 2025. In 2013, the aluminum industry grew 25%, as aluminum allows for lightweighting vehicles, a crucial enabler in increasing fuel efficiency.

As mentioned before, another huge element of Novelis’ move to increase sustainability is to reduce the embedded carbon in their products, which can be done by boosting recycled content. By using more recycled materials and by creating fewer new materials, Novelis reduces their carbon footprint. They’ve recently invested almost $500 million in doubling their recycling space by opening two new recycling plants, one in South Korea and the other in Germany.

Novelis is directly addressing the global issue of climate change, particularly the current concern of the maximum safe limit for concentration of carbon dioxide in the Earth’s atmosphere. The company’s method to decrease their GHG emissions can best be described as a life cycle approach, with a goal of reducing their emissions by 50% by 2020. This idea, coupled with increasing their recycled metal content to 80%, will help them reach their target.

Novelis has also incorporated supporting recycling education into their new vision, as well as advocating awareness and policy initiatives, which will escalate recycling rates and increase the company’s supply of post-consumer aluminum scrap. We at Phinix are huge proponents of all of the above, especially recycling education.

Take a look at Novelis’ website and the full report.

Developed and Written by Dr. Subodh Das and Tara Mahadevan

January 28, 2014

Phinix LLC

Copyright 2013. All rights Reserved by Phinix, LLC.

www.phinix.net    skdas@phinix.net

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