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High aluminum prices should promote more US plant upgrades; new mill investment uncertain: panel


US producers focus on debottlenecking to meet demand

Companies have moved to boost can sheet capacity

Record aluminum prices should encourage US sheet producers to continue near-term upgrades and expansions to their existing rolling mills, following a trend since the mid-2010s, but there is uncertainty regarding the prospect of investments for new hot mills over the next few years, panelists at the US Aluminum Association Annual Meeting said Sept. 30.

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"You'll find that every flat-rolled producer in the market is finding a place to debottleneck," Tri-Arrows Aluminum CEO Henry Gordinier said. "You always have a list of things that you can do that are on the shelf to debottleneck."

Gordinier said the debottlenecking upgrades to mills would serve as a "good bridge" as the industry ponders larger investments to meet rising consumer demand in various sectors.

In sectors such as the beverage can sheet market, Gordinier noted that a few companies have made recent moves to invest in existing capacity and meet growing demand. These moves include Kaiser Aluminum's recent purchase of the Warrick rolling mill in Indiana (formerly owned by Alcoa) and Arconic's reintroduction of can sheet production at its Tennessee operations.

"Everybody is watching, and these [upgrades] are and will be part of the solution in order for us to make sure we can ... support the market," Gordinier added.

Beyond investments into existing facilities, it is unclear when the industry will see an announcement for the construction of a new rolling mill in the US to take advantage of current bullish trends, according to Constellium Rolled Products CEO Buddy Stemple.

"The big question everybody is asking is who is going to build the next hot mill, and that is a very difficult question to answer because that is extremely expensive," Stemple said.

"But you know the markets are moving in that direction. Finally, somebody will put a return together and somebody will finance it and somebody will build it. We just don't know when."