How U.S. Steel is bracing for the aluminum onslaught

By

Updated

Steel companies brace for aluminum onslaught

Steel has traditionally been the metal of choice for automobile companies. However, aluminum has been making inroads into this steel bastion. U.S. automakers are required to increase their fuel efficiencies under the federal emission standards. One of the ways they will do this is to reduce the weight of vehicles.

auto increase in use

Article continues below advertisement

Increasing vehicle intensity in vehicles

The above chart shows the increasing use of aluminum in vehicles. Since aluminum is a light metal compared to steel, automakers have increased the aluminum content in vehicles. Ford’s F150 truck is now a full aluminum body truck. The truck will be in showrooms early next year. Analysts in both steel and aluminum industries will be closely watching the interest the F150 generates.

Let’s see what steel companies are doing to brace for this aluminum onslaught.

High strength steel products to help steelmakers

Steel companies are working with automobile companies to develop advanced high strength steel products. These products are lighter than steel. ArcelorMittal (MT) and AK Steel (AKS) already produce these products.

With new management in place, U.S. Steel Corporation (X) will collaborate with automotive companies to produce high strength steel products. This should help the comopany compete with other steel companies as well as with aluminum producers such as Alcoa (AA). Please be aware that currently Alcoa (AA) and U.S. Steel Corporation (X) are part of the Standard and Poors depositary receipt (or SPDR) S&P Metals and Mining exchange-traded fund (or ETF) (XME).

The new management structure should help U.S. Steel serve its customers better. It’s another logical step under Carnegie Way. But there are several challenges U.S. Steel faces in its transformation. Let’s learn more in our next part.

Advertisement

More From Market Realist