June 24, 2015
WSD: Steel Will Bounce Back in Auto Sheet War
World Steel Dynamics Co-Founder Peter Marcus was among the guest speakers at the Harbor Aluminum Summit this month in Chicago, and he wasted no time staking a claim for the material he’s most familiar with. “Ford Motor Co. made a huge mistake going to the all-aluminum body on its vehicle,” he asserted.
The steel analyst believes aluminum will continue to pick up market share gains for the next few years, with nonferrous usage moving from 600 million pounds in 2014 to 3.4 billion in 2018. However, at that point the product advancements in high-strength steel will make greater headway with the automotive OEMs, he predicts.
WSD commissioned Ricardo Engineering to study the likely developments in the ongoing battle between steel and aluminum to be the material of choice among automakers. The research firm responded with a report that broke from Ducker Worldwide’s well-known study, which forecasts strong gains by aluminum through 2025. The Ricardo study, Marcus said, was not subsidized by the steel industry.
The primary driver of steel’s resurgence against aluminum will be its lower price tag, Marcus said, and the steel industry’s ability to deliver the necessary weight savings over the next 10 years. Moreover, lightening vehicles is not as critical to fuel efficiency gains as most people assume. Weight reduction represents just 10 percent of the improvement for mid-sized SUVs and less than 13 percent for light trucks. Most gains will come from powertrain innovations.
Marcus explained that the cost differential between the two materials will drive much of the automakers’ decision-making. The cost to produce steel today ranges from 41 to 49 cents per pound for dual-phase material. Aluminum’s cost is between $1.55 and $1.77 per pound. After stamping, the cost for a dual-phase steel product runs from $1.16 to $1.31, while aluminum’s 5182 series hits $4.03 and 6111 series tops out at $5.08 per pound. Even accounting for the need to use less aluminum, the price difference is substantial, he said.
“If this analysis is correct, it costs $1,700 more to use aluminum versus steel in the Ford F150,” Marcus said. “If I were a buyer, I’d be frightened about depending on aluminum on a long-term basis.”
Getting back to his opening remark about Ford, Marcus said the company’s mistake was committing to aluminum back in 2009, three years before the federal fuel efficiency requirements were even announced. “They underestimated the ability of steel to improve the product,” Marcus said.
Though his take on steel versus aluminum may not have received an enthusiastic response from his audience of aluminum executives, some of his points appeared to hit home. Harbor polled the attendees after his remarks to get their take on the automotive sheet competition. Half believe aluminum’s gains are being overstated, while just 17 percent feel aluminum’s market share will exceed forecasts.