PARIS (Reuters) - The decline of diesel engines will support the growing use of aluminum in vehicles as the auto industry pursues lighter models to meet emissions targets, the head of aluminum parts maker Constellium (N:CSTM) said on Tuesday.
As a lighter but costlier alternative to steel, aluminum has become a significant part of premium car models and efforts to bring electric-powered vehicles to the mass market has also raised the prospect of wider aluminum use.
"If diesel is struggling then in a way it's good for aluminum," Constellium Chief Executive Jean-Marc Germain told Reuters. "Aluminum is very well placed to help reduce emissions."
Diesel's reputation was tarnished by an emissions test-cheating scandal at Volkswagen (DE:VOWG_p) while distrust of their greater release of nitrogen oxides and particulates has overshadowed their lower CO2 emissions compared with gasoline.
Politicians are calling for bans on diesel vehicles while the European Union is discussing new rules to cut car emissions limits by around a third by 2030.
Despite recent successes for steel in models such as the Tesla (NASDAQ:TSLA) 3 and the Audi 8, Constellium has kept a medium-term projection of 10-20 percent annual growth in automobile demand for aluminum, seeing further uptake as car makers shift toward lighter, multi-material solutions.
"Most of the time, aluminum replaces steel while steel replaces steel," Germain said.
Aluminum's challenger role in the car industry is the opposite of its position in planemaking, in which its historical dominance has been eroded by plastic composite materials.
German reiterated a previous outlook for 2 percent annual growth in aeronautic demand for aluminum, about half the level seen in the past.
Constellium is among the world's largest suppliers of aluminum products alongside peers including Arconic (N:ARNC) and Novelis.
In response to the threat of U.S. sanctions against major aluminum producer Rusal (HK:0486), Constellium has re-allocated to other suppliers for next year the primary metal it had sourced from the Russian firm, Germain said, reiterating this represented just 2-3 percent of its metal intake.
Constellium was not having problems securing aluminum supply from its pool of suppliers and these firms were not showing concern about a supply squeeze in either aluminum or input alumina due to the Rusal issue, he said.
Constellium, which reported third-quarter core earnings of 114 million euros, up 2 percent year-on-year, is not looking for acquisitions as it focuses on a plan to reduce debt, Germain said.
The company, whose roots lie in the French aluminum industry, plans to move its headquarters back to France next year and scrap its current head office in the Netherlands, Germain said, adding its shares would remain listed in New York.