Novelis sticks to light-cars bet as Trump slams mileage rule

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A worker uses a crane to move a roll of aluminium made from recycled material at a Novelis plant in Brazil. Photo credit: Bloomberg

Novelis Inc. is sticking to a bet that automakers will want lightweight aluminum to make cars more efficient, even as the Trump administration pushes to roll back mileage rules.

Atlanta-based Novelis agreed last week to acquire Aleris Corp., a maker of aluminum products used in everything from automobiles to packaging, for $ 2.6 billion on Thursday. Novelis CEO Steve Fisher said in an interview that he thinks the rising aluminum demand will withstand the current U.S. efforts.

Automakers are increasingly using lighter, stronger materials in a range of vehicles, including Ford Motor Co.’s aluminum-bodied F-150 pickup. While a person familiar with the matter said that the U.S. is readying proposals to weaken Obama administration automotive fuel economy standards, Fisher said any changes would probably be temporary.

“Any loosening up would only be on a short-term — not long-term — basis,” Fisher said in an in interview on Thursday. “Of course, we think about governmental standards and where they’re going. There seems some potential on relaxation, but we don’t know how that would exist. We’re in it for the long term.”

Novelis hasn’t seen a significant impact on its business yet from the U.S. aluminum import tariffs announced in March, but that could change if the trade dispute continues to escalate, Fisher said.

“Demand is still good and we see good growth in all end market for the U.S. and globally,” Fisher said. “Everyone has a cautious longer-term vision if we see continued escalation of costs to the consumers.”

Orders to withdraw stockpiled aluminum from warehouses tracked by the London Metal Exchange doubled this week. The spike in orders comes as aluminum prices head for the first weekly gain since the start of June.

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