Century Aluminum Co. (CENX)

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Consumer Electronics Use Of Aluminum Growing Strongly - Alcoa

24 June 2011, 9:38 a.m.
By Debbie Carlson
Of Kitco News
http://www.kitco.com/

http://www.kitco.com/reports/KitcoNews20110624DeC_Alcoa.html

(Kitco News) - Aluminum use in consumer electronics has increased significantly as that industry seeks the metal for its aesthetic quality, for its ability to absorb heat and for its light weight, said an official with Alcoa.

Greg Wittbecker, vice president materials management for Alcoa, said the consumer electronics use is “very exciting” and that there has been an “explosion” in the applications of aluminum in the products.

Wittbecker said aluminum use in consumer electronics started with some of the innovative designs that came out of companies like Apple, which embraced aluminum for its “modern and clean-looking” aesthetics. But beyond the style factor, aluminum’s light weight and ability to be a heat sink makes it a natural fit for use in hand-held devices like netbooks, tablets and cell phones.

He said one area where aluminum will likely be seen is in the use of LED and high-definition television sets. As these TVs get bigger screens, weight becomes an issue, especially as consumers try to mount them on walls. Alcoa, he said, is working with manufacturers to replace the steel back plates to lessen the load and also to deal with the thermal management.

Wittbecker spoke to Kitco News on the sidelines of the Harbor Aluminum outlook conference in Chicago this week.

The rebound in vehicle production is going to be one of the main drivers of aluminum demand wit auto production, heavy trucks and aviation all seeing a resurgence as the economy improves, he said, echoing what several presenters at the Harbor conference mentioned. These areas have been tradition sources of demand for aluminum.

RECYCLING, OTHER GROWING REGIONS

As industries like the automotive sector rebound, the demand for primary and secondary aluminum metal also has risen. Wittbecker said supplies of scrap are inching upward as recycling has risen in the U.S. to 58% in 2010, a one percentage-point rise year-over-year.

China is a top area for growth in aluminum output and use, but another region that is seeing growth in aluminum production is the Middle East, he said. Several new projects have started in the region, including projects in Abu Dhabi, Oman and Qatar. These projects will add to new aluminum supply at a time when demand for the metal is growing.

India has great ambitions to become an aluminum supplier, he said. There are some questions whether India can emulate China’s growth, he said. Right now India’s primary aluminum demand is 1.8 million metric tons versus China’s 19 million tons, he said.

However, that is growing on a compounded annual rate of 9%, which is attracting attention of the aluminum industry. By comparison, North America’s annual usage is between 5.5 million and 5.8 million tons.

“India has tremendous potential,” Wittbecker said. “But India has big issues in whether or not it can realize all of the potential of its resources. India has world-class bauxite reserves and significant reserves of thermal coal.”

India’s main aluminum producers have ambitious plans to bring 10 million tons of alumina capacity online by 2016 and have announced they will build 6 million tons of smelting capacity by 2016.

Primary aluminum production is notoriously energy-intense. Even though India has great coal reserves, it has trouble accessing it because much of it is located in population centers. Thus, it is importing coal to fuel the some of the refiners and will use these imports to fuel the new refiners and smelters it hopes to build. If imported coal prices rise, that will significantly increase the price of aluminum.

There might be some alternatives to coal, but they are not likely to completely replace coal use in India. Wittbecker said India is in talks to develop more solar energy and is also looking at more hydropower and nuclear power, but by and large India is still dependent on coal and will be for the foreseeable future.

“The issue with renewable is how do they provide the base load security. You still need to have a backup because the sun isn’t always shining,” he said.

By Debbie Carlson of Kitco News [e-mail]