US aluminium producers saw shipments to the automotive sector recover by the end of the second quarter despite significant declines in automotive segment sales during the period as coronavirus pandemic restrictions forced several manufacturer shutdowns in late March, but the demand outlook for the rest of 2020 still remains unclear.
Novelis CEO Steven Fisher said the company's North American automotive aluminium sheet business nearly returned to pre-pandemic levels in July after original equipment manufacturers restarted production in May, but the positive trends did not necessarily set a precedent for the rest of the year.
“We’re not going to give any further guidance in the second half of the year,” Fisher told industry analysts. “We feel good about our second quarter, and I think we have to all wait and see what happens as it relates to various impacts of Covid in economies as we get into the second half of the year.”
Novelis' total rolled aluminium product shipments slipped 7 per cent year over year to 774,000 mt during its quarter ending June 30, but the company said its automotive-specific sales for the quarter were down 50 per cent.
Constellium CEO Jean-Marc Germain shared similar sentiments regarding the automotive end market following lower sales in the quarter and returning demand in June.
“While demand from our customers increased significantly in June, we have experienced uneven demand for our products as a result of supply chain challenges and Covid-19 hotspots,” Germain told investors2. “While we are optimistic about automotive demand in the back half of 2020, the demand for our products will be dependent on the level of production at the OEM.”
Constellium’s shipments from its automotive structures and industrial segment in Q2 fell 33 per cent year over to 44,000 mt, and its packaging and automotive rolled product sales fell 23 per cent in the same period to 221,000 mt.
Based in Paris, Constellium operates multiple aluminium plants in the US. Despite lower sales in the quarter, some aluminium producers expressed optimism regarding automotive industry demand recovery in the second half of the year. Arconic said automotive OEM production halts negatively impacted the company's ground transportation business, with Q2 organic revenue in the segment plummeting 57 per cent compared to the year-ago period, according to an investor presentation.
The Pittsburgh-based aluminium producer's overall shipment revenue in Q2 slid 38 per cent to $1.2 billion, but CEO Tim Myers said the company expected healthy recovery in the automotive end market for the remainder of the year and into 2021, with H2 2020 demand possibly reaching H2 2019 levels.
“The projection for 2020 North American automotive production is 12.6 million vehicles, increasing to 14.6 million vehicles in 2021, which would be an increase of 15 per cent,” Myers told analysts, referencing IHS Markit data.
Kaiser Aluminum said most of its automotive industry-focused facilities have recently ramped up production after customers in the sector resumed operations. With the company also securing several key contracts for new automotive programs, projections looked strong going into H2, according to Chief Operating Officer Keith Harvey.
“We anticipate these and other new programs previously awarded will begin to ramp up in the second half of 2020 and will continue to drive growth in 2021 and beyond,” Harvey said July 23. “As we look to the second half of 2020, we anticipate demand for our automotive applications will rebound from the weak second quarter 2020 with value-added revenue returning to a pace similar to the first quarter of 2020.”
