The global aluminum alloys market is estimated to be driven by increasing demand from transportation industry. Aluminum alloys are majorly utilized in the transportation industry owing to its properties such as corrosion resistance, lightweight, recyclability, high strength, and thermal & electrical conductivity.
Rising stringent regulations around the globe aimed at curbing CO2 emissions from automobiles have forced the manufacturers to reduce weight and increase fuel efficiency of automobiles. Aluminum is a lightweight material and is being majorly used in the automotive industry to lessen the weight of vehicles. One pound of the product can replace up to 1.8 pounds of conventional steel thus reducing the overall weight of the vehicles.
Lightweight vehicles have better acceleration, braking, and handling, which in turn reduces fuel emissions and battery power consumption in electric vehicles. The beneficial properties of the product such as lightweight, corrosion resistance, and dent resistance allows car manufacturers to make the car body thicker in order to increase the dent resistance. Therefore automobile manufacturers are gradually shifting from steel to aluminum alloys to reduce vehicular weight.
Owing to the aforementioned reasons, the automotive industry has been experiencing a significant change over the years and there is an increasing trend toward reduction of automobile weight. For instance the average share of lightweight materials (aluminum, magnesium, and plastics) in an automobile increased significantly from 17.6% in 2000.32% in 2018.
Aluminum alloys production is majorly reliant on availability of aluminum along with other alloying elements such as magnesium, copper, zinc, tin, etc. The fluctuation in prices of these raw materials may act as a restraint to market growth.
The major challenges for the aluminum alloys market include increasing energy costs and environment pollution. The production of aluminum consumes a large amount of energy, and release environmentally hazardous substances. To overcome these challenges, new technologies need to be developed for production to reduce the energy consumption and necessary measures are to be taken to protect the environment.
In terms of product, the aluminum alloys market is segmented into cast alloy and wrought alloy. As compared to cast alloy, wrought alloys have more aluminum content and tensile strength and therefore there is a significant demand for wrought alloys. The future segment outlook also remains lucrative as recent trend indicates increasing adopting of the product by transportation and building & construction industry.
Cast alloys such as aluminum-tin alloys exhibit extremely high wear resistance and low strength. While, aluminum-copper alloys have high strength and low wear resistance. The demand for customized parts from the industrial machinery sector is predicted to have positive influence on the segment growth.
On the basis of end-use, the aluminum alloys market is categorized into transportation, building & construction, machinery, packaging, and electrical. Transportation industry dominated the market owing to the rapid penetration of the product in vehicle manufacturing. Rising demand for lightweight vehicles coupled with positive growth in aerospace manufacturing are the major drivers of the segment growth.
In the transportation industry, passenger cars dominate the utilization of the product. The key countries driving the demand of passenger cars are China, India, and the U.S. The primary focus is likely to remain on India and China due to low labor costs and less strict regulations on fuel emissions. For instance, global automotive players are looking at India as a global hub for manufacturing passenger cars. In India, the production of passenger cars increased by 2.6% from 2017 to 2018 as per the data published by the OICA in 2018.
The demand for the product in building & construction industry is driven by rapid urbanization in emerging economies in Asia Pacific. Builders and contractors in the region have realized the benefits of aluminum over steel such as lightweight and significant strength. Therefore increasing substitution of steel by the product is a significant factor contributing to the market growth.
In terms of region, Asia Pacific dominated the market in 2018. Asia Pacific, being the largest producer of automobiles in the world is therefore also the largest consumer of the product. As of 2018, Asia Pacific produced 54.8% of the total automobiles produced around the world. Besides the massive manufacturing base in the region, the rising preference of automotive manufacturers to shift to aluminum is likely to boost the regional market growth.
In North America, recent trend indicates consumer preferences towards high-quality and more fuel-efficient motor vehicles. Such preference coupled with stringent CAFÉ regulations to improve the fuel economy of the vehicles are likely to increase the use of the product in the region’s transportation industry.
The major players in the global aluminum alloys market includes Aluminum Corporation of China Ltd., Rio Tinto Alcan, Alcoa Inc., and United Company RUSAL Plc. These companies are highly competitive and account for major share in the market. Some of the other key industry players include UACJ Corporation, Norsk Hydro ASA, Dubai Aluminium Company Ltd., Aluminium Bahrain B.S.C, Aleris International Inc., Constellium, and Kobe Steel Ltd.
Companies are majorly targeting the transportation industry to sustain competition and increase market share. For instance, In March 2019, UACJ formed an agreement with two CITIC group subsidiaries namely, CITIC Bohai Aluminum and CITIC Dicastal for the aluminum parts and components in the automotive industry. These companies will form a new joint-venture to manufacture extruded and machined parts and components.
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