Kobe Steel is studying a plan to enter the U.S. market for aluminum automotive sheet in a joint venture with a Toyota Group holding. The auto industry is already drawing new capital investment from established producers, including Novelis’ estimated $100-million plan to expand at Oswego, N.Y.

Kobe, Toyota Eyeing U.S. Aluminum Sheet Venture

May 27, 2014
Proposal would address growing demand for lightweight automotive panels Decision by September, start-up in 2017 Kobe to produce, Toyota to market Wise Alloys to supply coils

Kobe Steel Ltd. is evaluating its prospects for a new manufacturing and distribution venture in the U.S., supplying aluminum sheet for automotive body panels and automotive heat exchangers.  The proposed venture would be a collaborative effort with Toyota Tsusho Corporation, a trading arm of the Toyota Group.  

Kobe is still evaluating another venture to produce cold-heading quality steel coils for automotive markets, in Mexico.

According to their joint statement, Kobe Steel and Toyota Tsusho intend to complete their evaluations and complete a venture agreement by the end of September 2014. Production would start in 2017.

Because the proposal is at an early stage of development, the details are spare concerning the capital investment, process capabilities, or production volumes.

The primary focus of the operation would be to produce and distribute automotive body panels, as well as aluminum sheet for automotive heat exchangers. Kobe Steel would be responsible for production, quality assurance, and business operations. Toyota Tsusho would handle product marketing.

The statement indicated the venture’s process equipment would be mainly “downstream operations.” It indicated that Kobe Steel is in talks with Wise Alloys LLC, Muscle Shoals, Ala., to supply master coils for rolling aluminum sheet.

Regulations, Forecasts Drive Investments

The premise of the joint venture is the forecast for rising demand for aluminum flat products the North American auto industry. Kobe Steel cited increasingly stringent CAFE (corporate average fuel economy) standards that mandate a 25% improvement on 2011 averages by 2016, and 50% improvement by 2025.

Kobe Steel predicts North American demand for aluminum body panels will increase from approximately 100,000 metric tons/year currently to over 1 million metric tons/year to over in 2020.

Efforts to design and build lighter vehicles have seen domestic automakers incorporate aluminum in random ways, but Ford Motor Co.’s 2015 will feature the first all-aluminum body in a high-volume vehicle program. Aluminum producers expect more examples to follow, and as such have initiated several expansions of their U.S. rolling operations.

Novelis is investing about $100 million to build a new aluminum strip finishing line with a capacity of 120,000 metric tons per year at its plant in Oswego, N.Y., as part of a global expansion in aluminum strip capacity budgeted at $205 million. A similar project is planned at the Novelis plant in Nachterstedt, Germany, as Novelis expects global automotive industry demand for aluminum sheet to grow by more than 30% annually through 2020. 

Similarly, Alcoa is expanding its rolling operations at Davenport, Iowa and Alcoa, Tenn., investments that total $575 million.

Kobe Steel has numerous manufacturing operations in the U.S., including steel strip coating and processing, wire processing, aluminum forging, and welding consumable products, among others, but its aluminum strip processing capabilities are in Japan.

There, Kobe Steel controls more than 50% of the Japanese market for aluminum panel material, which it supplies to Japanese, U.S., and European automakers.

Last June, Kobe Steel entered into a technical cooperation agreement with Hydro Aluminium Rolled Products GmbH for aluminum sheet used in automotive body panels. Last September, Kobe Steel established Kobelco Automotive Aluminum Rolled Products (China) Co. Ltd. in Tianjin to produce aluminum sheet for automotive body panels in China. That operation will begin in early 2016.

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