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In recent Wall Street Journal article Ducker Worldwide revealed steel continues to dominate, at about 87 Million tons of steel used in the production of automobiles world-wide annually

03.16.11

Aluminum Tests Its Mettle Against Steel in Drive for Lighter Cars

By Robert Guy Matthews

Tougher fuel-efficiency standards, made even more urgent by the recent run-up in gasoline prices, are intensifying the fight between steel and aluminum companies to build the next generation of lightweight cars.

Auto makers want to strip out anywhere between 250 pounds and 700 pounds from each car, or 15% of the weight, to achieve the 7% to 20% fuel-usage reduction mandated by the Transportation Department and the Environmental Protection Agency. Other countries, including members of the European Union, are also insisting on greater fuel efficiency, making the drive to reduce weight a global one.

"To get to the next step in fuel economy, you have to look at a new material: aluminum," said Klaus Kleinfeld, chief executive of Alcoa /quotes/comstock/13*!aa/quotes/nls/aa (AA 16.08, +0.04, +0.25%) Inc. The country's largest aluminum maker has hired more than 1,300 people over the past year, many of them for Alcoa's automotive business, and Mr. Kleinfeld said he wants to double the amount of aluminum he sells to car makers by 2013.

Aluminum is, on average, 10% to 40% lighter than steel, depending on the product, but is more expensive.

Mr. Kleinfeld said, "I believe steel has reached its limit," referring to its appeal for the next generation of lighter, more fuel-efficient cars.

Not surprisingly, Lakshmi Mittal, CEO of Arcelor Mittal /quotes/comstock/13*!mt/quotes/nls/mt (MT 34.04, -0.26,-0.76%) , the world's largest steelmaker, has a different view: "I don't see what Klaus is saying. This has been the prophecy of the aluminum industry for a long time."

The auto market is huge in terms of volume and profits for metal makers, consuming more than 100 million metric tons of metal in a year. Steel continues to dominate, at about 87 million tons of steel used in the production of automobiles world-wide annually, compared with about 12.5 million tons of aluminum, according to Ducker Worldwide, a consulting and research firm. The mandate for lighter cars is opening the door wider for aluminum.

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