Kidd: Steel's Fate in the Hands of the Consumer

By Tim Triplett

Glenn Kidd is a steel guy through and through. He spent the bulk of his career as an economist for U.S. Steel, before retiring a few years ago. So it may not have been easy to acknowledge that steel is facing an uphill battle in the automotive market, where aluminum and other lightweight materials are gaining ground as carmakers work to eke out every mpg they can. “Every market has different and changing needs. No one material has a lock on any market forever,” he said in his remarks Feb. 27 during FMA’s annual meeting in Orlando.

Offering his take on steel versus aluminum, Kidd said it’s a question of balancing the strength, weight and cost for each application. Steel offers excellent strength at relatively low cost, but aluminum is lighter, and that’s the most critical attribute for automotive designers today. And, of course, steel rusts.

On the flipside, aluminum costs more than steel, though how much more is difficult to ascertain. Steel is not publicly traded and the mills are keeping the cost of their new high-strength alloys close to the vest. There is a futures market for aluminum, on the other hand, which takes some of the volatility out of the market and gives buyers an opportunity to hedge their bets.

Several factors offset aluminum’s weight advantage, he said. It’s not as strong as steel on a pound-for-pound basis and it has workability issues. Use of aluminum to make cars and trucks adds manufacturing costs and slows production. Instead of 90 conventional trucks per hour coming off the assembly line, it could be as few as 60 aluminum-intensive vehicles. That represents an additional $1,000 to $1,500 in the cost of assembling each vehicle, which is already more expensive because of its aluminum parts.

Ford’s conversion of its popular F-150 pickup to an aluminum body took roughly 750,000 tons of annual steel consumption out of the market, he estimates. It will be two or three years before the automaker learns if the new truck is a hit with consumers. In the meantime, competitive pressures are likely to force the other major brands to introduce their own aluminum trucks even before they get to see how well the new F-150 is received. That raises the question of whether the aluminum industry will even have the capacity to supply all the new automotive demand.

In a sense, Kidd concluded, the steel industry is being held captive by the consumer. If buyers of new cars and trucks embrace the F-150 and other aluminum vehicles, that will only accelerate the loss of market share by steel. “Will better fuel economy and corrosion resistance win over consumers? We have to wait and see. Depending on how this plays out, it may be largely a lost market for steel.”

February 2017: U.S. Auto Industry Needs NAFTA
More...
 
Pause
February 2017: Have Steel Prices Taken a Turn?
More...
Fall 2016: Cutting & Sawing Equipment
More...
Summer 2016
More...
 
Pause
Advanced Controls on Braner Slitters
More...
AHVS Precision Leveler Features Flip-Top Design
More...
Formtek’s Tishken Slitter Increases Production Volume
More...
Red Bud System Handles High-Strength Steels
More...
Bradbury Launches Flat Trak CL Monitoring System
More...
Artus Knives Custom Designed
More...
 
Pause
Privacy Statement  |  Terms Of Use
Copyright by Metal Center News



Tuesday, March 28, 2017