Novelis Seeks to Dominate North American Soda-Can Market as Alcoa Retreats
Philip Martens, president of Novelis
Jonathan Fickies/Bloomberg
Philip Martens, president of Novelis in New York on June 2, 2010.
Philip Martens, president of Novelis in New York on June 2, 2010. Photographer: Jonathan Fickies/Bloomberg
Novelis Inc., the U.S.-based aluminum unit of India’s Hindalco Industries Ltd., said it will become the largest North American maker of metal for beverage cans this year as Alcoa Inc. curtails output.
Novelis will increase its North American shipments of aluminum for cans by about 3 percent to an estimated 1.75 billion pounds (794,000 metric tons) of sheet, Novelis President Philip Martens said yesterday in an interview at Bloomberg headquarters in New York. That would be about 45 percent of the North American market of 3.9 billion pounds, he said.
“We’ve gained some share in flat rolled and can sheet,” Martens said. “In the U.S., we will be the dominant can-sheet provider.”
Alcoa, the largest U.S. aluminum producer, said in April it curtailed can-sheet volumes, which reduced shipments of flat- rolled products by 75,000 tons in the first quarter. Alcoa Chief Executive Officer Klaus Kleinfeld said at that time the company decided to let a money-losing 10-year contract expire to focus on more profitable business. He didn’t identify the customer.
Alcoa “took a different position within the U.S. market and that has opened up opportunities for others including ourselves,” Martens said.
Alcoa’s can-sheet volumes are expected to decline “significantly” in North America this year due to its change in pricing strategy, the company had said in its 2009 annual report filed in February. Kevin Lowery, a spokesman for New York-based Alcoa, declined to comment on Alcoa’s share of the U.S. can-sheet market. He referred back to Kleinfeld’s comments when asked about the statements by Martens.
‘Long-Term Profitability’
“We are focused on the long-term profitability of the business,” Lowery said in an e-mail yesterday.
Martens said Novelis’s contracts for beverage cans are profitable. He didn’t supply details.
“We certainly don’t have the perspective that Alcoa has,” Martens said. “These are profit-contributing parts of our business.”
Volumes at Alcoa’s can-sheet business may be cut by more than 25 percent after the company took a harder line on price increases, Charles Bradford, a partner at New York-based consulting firm Affiliated Research Group LLC, said in a telephone interview this week.
“Alcoa may have thought no one was big enough to absorb that business,” Bradford said.
Alcan Spinoff
Hindalco, India’s largest aluminum maker, acquired Novelis in 2007, two years after it was spun off by Montreal-based Alcan Inc. Novelis, based in Atlanta, had $8.67 billion in sales in the fiscal year ending March 31, 54 percent of which came from sales of aluminum used for beverage cans. Novelis has about 11,600 employees in 11 countries, the company said last month.
Hindalco rose 3.25 rupees, or 2.3 percent, to close at 145.95 rupees in Indian trading. The stock has gained 56 percent in the past 12 months, giving the Mumbai-based company a market value of 279 billion rupees ($6 billion).
Alcoa fell 11 cents, or 1 percent, to $11.37 at 4 p.m. in New York Stock Exchange composite trading. The shares have gained 13 percent in the past year.
Aluminum for delivery in three months on the London Metal Exchange declined $29, or 1.5 percent, to $1,955 a metric ton. The price of the metal has increased 32 percent in the past year.
To contact the reporter on this story: Edmond Lococo in Boston at elococo@bloomberg.net.
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