Novelis expects global demand for its rolled aluminum products to keep rising, driven by Asia; demand from auto industry expected to rise by 25%, electronics by 10%-15%, cans by 4%-5%

Alison Gallant

LOS ANGELES , August 26, 2011 (Industry Intelligence) – Global demand for Atlanta-based Novelis Inc.’s products is rising, particularly in Asia, and the world’s appetite for rolled aluminum is likely to continue growing, Reuters reported Aug. 18, citing a recent interview with CEO Phil Martens.

Demand from the South American market has been robust and has maintained its strong pace from last year while Europe has surpassed expectations, Martens told Reuters.

North American sales for the world’s leading producer of rolled aluminum slightly missed expectations on weakness in its can business, but still improved year-over-year, Martens said. The company anticipates that the U.S. market will continue to improve, but warned that the next one or two quarters would be telling.

Forecasts for other markets in the world range from stable to comparatively strong. The only weak spot is electronics, Martens said, because of a glut of flat-screen televisions that softened demand for Novelis’ products from the electronics sector. Novelis has responded by adjusting its product mix, weighting it more toward other electronic goods including cellphones, laptops and desktops, Martens told Reuters.

The auto industry has helped boost sales for Novelis. Europe has been strong due to steady demand from automakers such as BMW whose rate of production has not slowed in August as it typically does because of high demand for its product from Asia.

The U.S. auto industry has also helped to boost sales. Approximately 4% of Novelis’ yearly output goes to automotive sheet for the U.S. market. Aluminum sales in the auto sector are expected to grow for at least the next five years, according to Martens.

By 2015, Martens forecast aluminum demand from the global auto industry to grow by 25% and electronics demand to grow by 10% to 15%. Martens also projected a 4% to 5% increase in demand for cans.

For the U.S. market, Novelis has moved away from products for housing and infrastructure for the time being. The company doesn’t expect those markets to pick up again for three or four years, Martens said.

The primary source of this article is Reuters, London, England, Aug. 18, 2011.

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