Revved up. (Nonferrous).

Automakers are still finding additional ways to use aluminum, but the public will need to buy all those vehicles for aluminum markets to feel the difference in 2002.

Based on presentations made at the Aluminum Spotlight at the ISRI Annual Convention, held in Las Vegas in March, attendees may have left with some brighter pricing hopes for this year compared to last.

William Bosanquet, a vice president with Paris-based aluminum company Pechiney Trading France, presented the case for aluminum's growing use in the vehicles market. In the 20-year span from 1985 to 2005, the aluminum content of passenger vehicles is expected to increase from four percent in 1985 to 12 percent in 2005.

Bosanquet noted that a projected increased in aluminum castings in the U.S. is particularly "good news, since these usually come from recycled materials." An average American-made auto contained 178 pounds of aluminum castings in 1996, but that figure is expected to rise to 227 pounds with the 2005 model year.

For scrap demand to really increase, the overall economy will need to spur the sale of cars and other metals-laden objects. Lloyd O'Carroll of BB&T Capital Markets, Richmond, Va., noted that "cyclical indicators suggest the recession is over," but also hinted that the recovery would not necessarily be a swift one.

O'Carroll's models indicate that while the GDP during the average recovery increases at a 6.3 percent annual rate, this recovery may check in closer to 4.0 or 4.5 percent.

He noted that even while some segments of the economy were in recession, two sectors that consume a lot of aluminum--housing and automotive--suffered very brief setbacks but remained relatively stable compared to the technology segment of the economy.

O'Carroll also noted that global aluminum inventory rose overall in 2001, but he does not see that trend continuing. The shutdown of smelters in the western U.S. states (some of which are gradually being restarted, others of which may never restart) combined with an increase in demand should mean total inventories will be reduced in 2002 and 2003.

"There is currently not a single greenfield [aluminum] smelter under construction anywhere in the world," said O'Carroll. "That is the first time that has been the situation in three decades."

Average U.S. Refiners Buying Prices for No. 2 Copper Scrap

(cents per pounds

March 2001     63.82
April          61.36
May            61.93
June           57.95
July           57.50
August         55.50
September      55.00
October        52.29
November       53.68
December       54.50

January        55.40
February       57.34
March          59.64

Note: Table made from bar graph.

Source: American Metal Market