8th OEA International Aluminium Recycling Congress in Vienna
The European Aluminium Market – Today and Tomorrow Dieter Braun Chairman European Aluminium Association
Ladies and Gentlemen, It is a great honour for me to be the first to speak at this significant important conference. Aluminium recycling is not only of great importance for the companies which are directly involved in this activity. It constitutes a central part of the sustainability element of aluminium. For a material that wants to continue to progress successfully in a world of limited resources, it is not enough anymore to count on performing material characteristics. It must in addition be proved that the material will be available on the long run and that it is produced in an environmentally sound manner. Thanks to a highly developed recycling industry, the aluminium industry can bring this proof. As chairman of the European Aluminium Association, I believe that it is a very important element for our industry to be able to count on well organised recycling operations and I am convinced that this Congress will convey this belief to you, too. I am of course especially pleased that OEA, the organiser of this congress, has since a good year been closely co-operating with EAA. OEA carries out the operations of the Recycling Division within EAA and in that way allows EAA as the umbrella organisation of the European aluminium industry, to tackle to all the facets of the recycling of aluminium in a highly competent way. Of course we must not forget that the recycling of aluminium is only possible if aluminium has been first produced and processed. Aluminium scrap as a raw material is neither a natural raw material which is extracted in ore mines nor does it grow on trees. In so far, the growth of aluminium use is of fundamental importance for the aluminium recycling industry. Against this background, I am pleased to give you a couple of information elements about the European aluminium market, that is where it stands today but above all of, how it will develop tomorrow. Operating a profitable and sustainable business is nowadays certainly not an easy task. Accelerating economic growth in China and Russia, the war in Iraq and other conflicts, and the devastating effects of four consecutive hurricanes in the Caribbean and the US, have pushed the oil prices to record levels, put stock markets under pressure and made currency exchange rates extremely volatile. The lack of political
8th OEA International Aluminium Recycling Congress in Vienna and economic stability in many regions of the world makes mid- and long term strategy development a challenging exercise. Meanwhile, in Europe, the business climate is also still encountering rough conditions although there seems to be some light at the end of the tunnel. The fragile economic recovery seems to persist, although this upturn has still to translate into structural and lasting growth. The aluminium sector is doing reasonably well in this context. European aluminium production has shown a continuous growth since its first introduction on the market. Over the last two decades this growth amounted to about 3% per year. The most recent figures reflect the same good results with primary aluminium production showing 5.6 % growth in 2004, and an expected 2% growth this year. Also the performance on the extrusion market for 2004 was good. Total European (EU25+EFTA) demand of extrusions in 2004 amounted to 2.696 million tonnes. This is a growth rate of 5.1%, well above trend growth. For this year, an increase of 1.4% in demand for Europe, is forecast to 2.733 million tonnes. The outlook is slightly more modest than the general economic growth forecast, which is mainly due to the weak outlook in construction, holding back demand growth for extrusions. For 2004, the demand for rolled products in EU25 plus EFTA amounted to 3.927 million tonnes, a 1.7% increase compared to the very good year 2003. The 2005 outlook for rolled product demand is to strengthen again and increase with 2.9%, more or less on trend growth. Aluminium penetration in the different end-use markets is also expected to grow. However, we should not sit back and relax! The market for aluminium beverage cans is still strong, especially through a predominance in the Eastern-European markets. The recycling of Aluminium cans in Western Europe is consistently growing and reached 48% in 2003. It is very variable per country and depends largely from different factors like the collecting system organization, the legislation in place, the richness of the inhabitants among others.
8th OEA International Aluminium Recycling Congress in Vienna (Foil 2 ) EVOLUTION OF UBC RECYCLING RATE
350 50 300 40
150 20 100 10 50
W - E u r o p e A lu c a n s p e r c a p it a p e r y e a r
U K A lu c a n s p e r c a p it a p e r y e a r
W - E u r o p e R e c y c lin g r a t e ( % )
U K R e c y c lin g r a t e ( % )
The potential for beverage cans market growth, especially in new EU countries is significant, but recent developments related to the mandatory deposit on one-way beverage cans in Germany have shown that there can be no guarantee for continuous growth.
R e c y c lin g r a t e ( % )
A lu c a n s p e r c a p it a /y e a r
8th OEA International Aluminium Recycling Congress in Vienna The aluminium deliveries to the building sector are still growing but are heavily depending on the general economic cycle in this market, which is currently coming out of a trough, but growth is not there yet. The building sector is of significant importance for aluminium. 25 % of the aluminium use in Europe is concentrated on to this sector, the core application being in rolled products and extrusions. Casting products can be found here as well. Of course we have once and again to be confronted with the question of how much of the aluminium used in the building sector is actually recycled at the end of its lifetime. In order to be able to answer this question with precision, we have commissioned the TU Delft with a specific study. Without going too much into the details, we can state that, thanks to its performing products, the aluminium industry not only plays an important role in this field, but is also very well positioned with a collecting rate of 92 to 98%. Anybody interested for more details, is invited to ask the congress office for further information. The outlook for further penetration in the automotive sector looks also promising. It is sure that there will be limits to the use of aluminium in the automotive sector, but the way I see it, these limits are not reached yet. Mainly for mass products, I expect a continuing growth in casting applications as well as in wrought alloy applications. Even if the volumes produced by the automobile industry do not progress in the future, the use of aluminium should continue to grow. In this context, the development of raw material prices has gained a new importance. Aluminium and steel are materials which complement each other through various ways in their applications. But of course they also compete with each other. In some cases, Aluminium has come off as a loser due to its price. Should the steel price maintain its levels of today, I can imagine that aluminium would gain ground in the automobile sector. Market shares are increasing in mass transportation but further effort is needed to promote the use of aluminium especially in the truck and trailer segment. Especially for that reason EAA has launched a project, which is also going to demonstrate the excellent recyclability of aluminium in this application. Of course we know, that most of trucks and trailers are going East or to Africa after their useful life in Western Europe. There they are used for a further period. We also know that the aluminium in these applications once they have reached their final stage will be more or less completely recycled. Nevertheless, we have to realize that the knowledge we have, as far as recycling of mass transport is concerned, is a knowledge which is mostly empiric. We are now underlining this by a scientific approach similar to what we did for the building and construction sector. The reason why aluminium is continuously progressing is that our metal offers intelligent and sustainable solutions to the requirements of modern-day society. The recyclability of the metal together with its light-weighting capabilities makes it the material of choice for a large number of products. The key to continuous progress can, in my opinion, be summarized in three basic themes: Innovative aluminium, competitive aluminium and sustainable aluminium. From the point of view of innovation, I see a range of opportunities especially in the downstream aluminium industry where rolled and extruded aluminium products give a solution-oriented response to market developments.
8th OEA International Aluminium Recycling Congress in Vienna
The following foils will give you an idea of innovative use of aluminium in interesting products: • A 380 – Aviation for the 21st century (Foil 3) Presently the A 380 is one of the most spectacular applications of aluminium. The aluminium industry has developed a lot of new solutions for this super-sized aircraft. It is a green giant, which is, thanks to its lightweight, more fuel efficient than a passenger car. •
A 380 - New alloys to double capacity and range (Foil 4) Especially for A 380 new aluminium alloys and solutions for very large parts have been developed.
A 380 - New alloys to double capacity and range (Foil 5) This wing span of 40 meter is a good example for the dimension of technical problems the designing engineers had to solve.
Europe’s new generation of rail transport (Foil 6) Rail transport has been neglected for many years. But a new generation of rail transport with many innovative solutions for aluminium applications initiates a new promising era of rail transport.
The new TGV – 40% more passengers, 12% lighter
The new TGV is one of the examples for this new generation. The benefit of using aluminium is evident. This new train allows to transport 40% more passengers because it is much lighter than the TGV of the previous generation. •
Aluminium’s contribution to urban sustainability
There are several contributions by aluminium to urban sustainability. This tram in Zurich is a very modern example and at the same time a benchmark for similar applications. •
Europe’s new generation of ferries
“Lighter, faster and greener”, these are the requirements of the leading ship builders. Aluminium helps to fulfil these requirements. Therefore shipbuilding is an increasing market for the light metal. •
Aluminium allows the speed to double at half the fuel consumption (Foil 10) This is a very interesting example of middle sized high speed ferries. Higher speed and less fuel consumption, these are convincing arguments to use aluminium.
8th OEA International Aluminium Recycling Congress in Vienna •
Superstructures in aluminium guarantee greater stability and comfort to passengers (Foil 11) The use of aluminium by the ship builders is not limited to smaller or middle class vessels. For big ones superstructures in aluminium have been developed which guarantee not only greater stability but also higher comfort to the passengers.
The largest application remains the automobile
Today the modern average car contains around 120 kg aluminium. In many cars like the BMW 5 series or the Audi A 6 you will already find more than 250 kg aluminium, even in the basic version. Last but not least I should mention the diesel engine, for many years the domain of cast iron, which we are now able to cast in aluminium. •
A versatile material for every packaging application
Aluminium is a versatile material for every packaging application. Among its many excellent properties it is above all the unique barrier function against light, odors, vapor which makes aluminium to a favorite of packaging materials. •
Unique properties for building solutions
Modern architects like to use aluminium for reasons of design and construction. A study which has been published recently by EAA has shown that 95 to 98% of the aluminium used in buildings is recycled in Europe. •
The material of choice for designers
Last but not least I want to draw your attention to design applications which are not only a real eye catcher but also very functional.
The competitive aspect is of the utmost importance especially for the upstream aluminium producers. The liberalisation of the energy markets in Europe has, until now, not resulted in any reduction in energy prices, quite on the contrary! Additionally, energy taxation measures and spin-off effects of the European emission-trading scheme are not contributing to a stimulating business environment. Over the last 5 years the European Aluminium smelters have made a jump on the international cost-curve which makes them now relatively expensive. This seriously deteriorates their ability to compete on a global market. Should this trend continue, producing competitive primary aluminium in EU countries will become impossible! Over the last years sustainability has been a central theme both in the political arena as for the aluminium industry. This theme is best illustrated by the aluminium products we bring to the market. The strength of the aluminium life-cycle, especially the added value in the use-phase, gives it a unique selling proposition.
8th OEA International Aluminium Recycling Congress in Vienna In short, we have to make sure that our industry remains a solution-driven sector with continuous attention for research, development and education. We need to be present and visible at European and National levels to ensure that we can operate in a stimulating economical and political environment. And last but not least, we have to understand and interpret sustainable development in the right way in order to determine how to contribute to the decoupling of economic growth from environmental impact whilst continuing to create value for shareholders, customers, employees and communities. The EAA has put tremendous effort in all of these areas over the past years. With this regard, I can mention the co-operation projects in the field of R&D sponsored by the European Commission but I would also need to highlight a more recent project, which is the creation of a European Aluminium Technology Platform. This platform should bring together stakeholders around a common vision for the development of sustainable technologies for the European Aluminium Industry. It will have a key role in the definition of `Joint Technology Initiatives` that are expected to be the backbone of the next RTD Framework Programmes. Our increased presence in the European political debate notably resulted in very fruitful discussions with the Dutch Presidency on the issue on how to combine sustainable development and competitiveness. The view as presented by the Dutch government at the latest informal Environment Council of Ministers was named: “Clean, Clever and Competitive”. I think that this slogan perfectly fits our objectives as outlined before. I wish you all a very interesting congress, Thank you very much.