Automotive aluminum demand to stay pressured in 2022, but worst may be over: Novelis

Novelis expects aluminum sheet demand for the automotive sector to remain pressured over the next several quarters as original equipment manufacturers, or OEMs, grapple with the ongoing semiconductor shortage, though the impact may not be as severe as in previous quarters, company CEO Steve Fisher said Nov. 3.

"The impact that we saw in the [April-June] quarter and the [July-September] quarter, we don't believe it will get worse than that going into our [October to December] quarter and our [January-March] quarter, but it's still very unpredictable," Fisher said during a call with analysts.

"We're preparing ourselves to potentially absorb [that] over the next couple of quarters, but from the auto standpoint, we're trying to get that offset by doing a little bit of a better job in moving production away where we see auto taking a little bit less and into [beverage] can and specialties [markets]."

However, Novelis recently announced two expansion projects at its Zhenjiang plant in China and Oswego plant in New York. Fisher said the two projects will bring the company's global automotive finishing capacity to 1 million mt and will come online within two to three years, coinciding with an expected rebound in automotive demand.

Meanwhile, the aluminum flat-rolled producer has been able to offset losses in the automotive sector with strong demand in other end markets, Fisher added.

"With the exception of uncertainties related to the semiconductor shortage impacting the automotive industry, our near-term demand outlook across most end markets also remains very positive," he said.

"Beverage can demand remains very robust, driven by consumer preference for sustainable packaging options and a package mix shift towards infinitely recyclable aluminum. We continue to expect strengthening customer demand for the foreseeable future as can makers have announced plans for new capacity over the next couple of years across regions."

The Atlanta-based Novelis shipped 968,000 mt of aluminum sheet in the July-September quarter, rising 5% year over year.

Novelis reported an income of $237 million on $4.12 billion in sales in the July-September quarter, compared with a $37 million loss on revenue of $2.98 billion in the year-ago quarter.