Kobe Steel invest in US aluminium plant?

plantJapan metal supplier Kobe Steel is thinking about a USD 835 million investment in a plant in the United States to produce aluminium sheet for automotive applications. The planned investment in the proposed US plant is larger than earlier expected, as the Japanese metal company may need to add capacity at the plant to process aluminium alloy. “Such an integrated plant would be three or four times bigger than originally planned and to justify the expenditure Kobe would need to find more customers for its aluminium, including those outside the car industry,” said Hiroshi Kato, senior officer for marketing and purchasing at Kobe Steel’s aluminium and copper division. Kato did not indicate a time frame or where the proposed plant might be located, reports Bloomberg.

Significance:Kobe Steel is believed to have redrawn its North America investment plan following the acquisition of its supplier of semi-processed alloy in the United States by its rival, Constellium, in 2014. The acquisition left Kobe Steel with a need to find another supplier or to invest in in-house processing. If the company is able to secure a new supplier, it would revert to its original plan to build a smaller plant with a capacity of 100,000 tonnes. Kobe Steel is eyeing a nearly tenfold increase in demand for aluminium sheet in the United States, where increasingly stringent fuel-economy regulations are driving automakers to produce lightweight vehicles. The company expects the new plant to help drive sales to Japanese automakers in North America, including Toyota, which is reported to be considering raising the aluminium content in its North American vehicles, including the Camry.

Several metal suppliers are expanding capacity in the US to meet an expected surge in demand for automotive aluminium. In 2014, Novelis disclosed its plant would double its North American production of automotive aluminium by 2018 and the supplier is in the third phase of a USD500-million expansion of its aluminium plant in Oswego, New York. Last year, another metal company, Aleris, announced plans to invest USD350 million to add aluminium automotive body-sheet-metal capacity at its Lewiston plant in Kentucky.

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