2 - ALU-WEB.DE
2 - ALU-WEB.DE 2 - ALU-WEB.DE
4 ROLLING 4 | 12-2009 APT ALUMINIUM NEWS Interview with Oliver Bell, Executive Vice President Hydro “The sector must contract to a profitable core” Oliver Bell, Executive Vice President Hydro, spoke at a Metal Bulletin Conference in September this year about the challenges faced by the aluminium rolling industry in Europe. The interview below – about the existing overcapacities in the rolled products market – was first published in ALUMINIUM International Journal which belongs to Giesel publishing house as well as APT Aluminium News. APT: Mr Bell, the economic crisis that has now lasted more than a year has also left its mark on the aluminium rolling industry. Production quantities have fallen drastically in Europe and margins are on the whole at a level that does not cover capital costs, as you explained recently at an aluminium conference. What are the consequences of this for the rolling sector? Bell: In Europe, we have for years had overcapacities on the market, which are now encountering even less demand due to the global economic crisis. In 2007, for the first time in many years there was again a market balance between the supply of, and demand for rolled products. In that year profit margins too improved to a satisfactory lev- Oliver Bell, Executive Vice President Hydro el. But 2007 was an absolute boom year which we will not see again for a long time. APT: So the profit situation remains stretched for the rolling industry. What can be done? Bell: Every producer must ask himself whether the business model of earlier times is still the right one. For a long time there was a drive to develop markets and provide sales outlets for smelter production. That worked because metal production and processing were largely in the hands of integrated aluminium groups, so on the down- Rolled products manufacturers increase prices Several manufacturers of semi-finished products have announced price increases for their aluminium rolled product range in recent months. Already in mid-October Hydro raised its base conversion price for all uncoated standard products supplied to the general engineering industry by 25 euros per tonne, valid for all deliveries in the first quarter of 2010. In early November both Novelis and Alcoa European Mill Products (EMP) announced price increases for their rolled products. Novelis said it was increasing the price of its aluminium coil and sheet standard products sold to European distribution and industrial customers by 30 euros per tonne for 1000, 3000 and 5000 series alloys and 6000 series in ‘O’ temper. The price change is effective for all shipment as from January 2010, except for orders under a fixed contract. Alcoa European Mill Products too announced a price increase on its conversion prices for all mill finish commercial rolled products produced at its European operations in Köfém (Hungary), Fusina (Italy) and Amorebieta (Spain). For all orders placed on or after 3 November 2009 a 15 euros per tonne increase on the base conversion revenue of December 2009 will apply for January 2010 deliveries. Already in October, the company had raised prices by 20 euros per tonne for all new November orders, with an additional 20 euros per stream side lower margins could be tolerated. With the change in the overall structure of the aluminium industry and the stronger focus of previously integrated companies on purely upstream or downstream business, this market processing model can no longer be sustained. APT: Why did this development occur? Because there were no synergies between production and processing, and the stock-markets like clear outlines? Bell: There certainly are synergies, for example in alloy development. And being closer to the market, we can see developments coming earlier and can react to them more quickly. This is what we see at Hydro – which is an integrated company as ever – every day in our operative business. The essential reason for the separation of this in itself reasonable value chain is that upstream profits are substantially better than downstream ones. The challenge for the rolling industry is to narrow the gap in that respect, so as to put our business on a lastingly solid foundation. APT: Indeed, what company would not like to achieve higher margins? In the present tonne increase for December deliveries. Latest price adjustment is from Aleris Europe which announced a rise of 50 euros per tonne for deliveries in Europe and 60 pounds for deliveries to the UK on the total conversion price of aluminium coil and sheet products delivered to European distributors and industrial end users. The price increase is effective for all new monthly and quarterly orders and contracts booked on or after 9 November 2009, that are not covered by existing contractual agreements. The aluminium rolling industry in Europe has been complaining of low prices and weak profit for some time. The sector is hit by overcapacities and low demand due to the continuing recession. crisis, however, as a rule the opposite is happening. Will that generate a downward price war? Bell: I am convinced that the business model of earlier days can no longer be sustained because of the trend in the industry. That applies to each player. The added value achieved must consistently cover its capital costs. Unless that happens the rolling industry will not survive. In the present crisis, moreover, capital is very expensive when available at all. But if one earns only a fraction of external capital costs, in the long term that threatens one’s very existence. In my estimation, on average in recent years the sector as a whole has been earning far less than its cost of capital. APT: A few months ago Hydro announced price increases for rolled products. That’s a brave decision in the current situation ... Bell: … and not only announced but actually implemented. Those price increases were urgently necessary, and other competitors have followed suit. The fact that in the present situation there has been no cut-andthrust competition between suppliers perhaps shows that some rethinking is already taking place in our industry. In earlier years, perhaps prices would have tumbled more rapidly. Today, in contrast, we see a marked price discipline. This shows that no longer can very much be done on the cost side. The entire sector is constantly addressing the question of costs. We at Hydro have already introduced and implemented programmes for cutting operational and personnel costs, but precisely when volumes fall as much as in the present recession, one has to make up lost ground on the proceeds side by raising prices. APT: Is that enough? Bell: No, it isn’t. In the long term it is decisive that sup- ply and demand must balance out. Then, prices will also settle sustainably at an acceptable level. But the latest development shows that the price wars of earlier times are no solution when volumes are at risk and every last tonne is being offered as cheaply as possible. One’s production must cover costs in full, otherwise one cannot survive for long. APT: If growth on the demand side does not provide for the necessary workload, capacities will have to disappear from the market. In the medium or long term, will some plants have to close, as is Rolled Products Coils today already happening here and there in the aluminium smelting industry? Bell: In principle there are two possibilities. Either a player will run out of steam at some time, or the sector as a whole will contract to a core that is profitable. But it must be realised that the cost structure in the rolling sector is fundamentally other than that on the primary side, where there are large differences in the respective cost positions of different plants. There, the difference between the first and second quartiles amounts to 1,000 to 1,500 dollars per tonne of aluminium produced. In contrast, in the rolling sector the cost curve is relatively flat and differences are not so marked as in the case of smelters. That makes natural selection more difficult. APT: So to achieve market balance, will the sector have to operate fewer production shifts? Bell: We have to adjust to a new and lower market level, since it is easy to see that growth in Europe will be relatively flat in the coming years and it will be some considerable time before we again see a market demand such as that of 2007. APT: Even though there is much talk about market growth in the car industry? Bell: That too is taking place, and we are even investing in plant, for example for the production of sheet for exterior body shells. But the quantities that can be generated by new sheet applications in the body and chassis zones cannot fundamentally take up existing overcapacities in Europe. It is in Asia that growth is dynamc, but our rolling industry can only serve those regions with a few star products from Europe. Most of what we produce in Europe is for the internal market, a market that is growing only at rather slow rates of two to four percent. Our industry must certainly adjust to this development, and I believe that the crisis is helping the rethinking process. APT: Mr Bell, many thanks for this discussion. all Photos and Graphics: Hydro
APT ALUMINIUM NEWS 4 | 12-2009 Reduction of lead times by 25 to 50 percent Elval live with Quintiq Company Planner Elval S.A., the sole Greek producer of rolled aluminium products, has gone live with the Quintiq Company Planner since April. To optimise the supply chain, the company is implementing an ambitious programme using also Quintiq’s Hot Mill, Cold Mill, Foil, Melt- Cast Schedulers and Routing Generator. Elval’s aim: to maximise capacity utilisation, to reduce inventory and to improve delivery performance. Elval uses as a backbone SAP, entirely integrated with the Quintiq solution. Elval produces aluminium foil for flexible packaging, lacquered can-end stock, coated aluminium strip for building and construction applications, as well as special magnesium alloys for shipbuilding, automotive and printing. In such a diverse production environment, world class planning and scheduling is an important success factor to maximize the performance of the plant. The processing of rolled aluminium products requires planning of various production flows, such as casting, hot- and cold-rolling as well Siemens supplies reversing rolling mill to China Chalco North East Light Alloy Company Ltd, a subsidiary of Chinalco, has ordered a single-pass reversing finishing mill with twin coiler from Siemens VAI Metals Technologies. The project is part of a hot and cold mill expansion which will be erected in Harbin. The order is worth some 13 million euros and includes key electrical and mechanical components together with the automation and process technology. The new rolling mill is scheduled to start production in August 2011. Chalco North East Light Alloy (Chalco Nela), based in Harbin in the northern Chinese province of Heilongjiang, produces plate and sheet, strip, foil, tube and pipe from aluminium, magnesium and Al-Mg alloys. The company’s products are used mainly in aviation, transport and communication as well as the electronics and lighting industry. The new reversing mill will increase Chalco Nela’s strip production capacity by 210,000 tonnes per year and allow production of end products of increased hardness and reduced thickness at enhanced quality levels. The plant has been designed for rolling strip with a width of up to 2,100 millimeters at a speed of up to 363 meters per minute. The finishing mill comprises a 4-high stand with automatic hydraulic gauge control as well as positive and negative work roll bending. Siroll ISV Sprays are used for spray cooling. In addition to the mechanical equipment, Siemens will be supplying the entire automation system and the drive technology for the rolling mill as well as thickness and profile measurement systems and the sensor technology. The automation system embraces the basic automation, including the technological controllers and the operating and monitoring equipment. The scope of supply also includes the process automation equipment for the entire hot strip mill, which also comprises a reversing roughing mill to be supplied by a local vendor. This degree of system compatibility ensures a consistently high product quality. All the systems and components belong to the ‘Siroll Alu’ integrated solution platform from Siemens for aluminium rolling mills. Siemens will also be responsible for commissioning the plant and training the customer’s personnel. Siemens to supply Siroll oiler to Alcoa Samara Siemens VAI Metals Technologies has received an order to supply a Siroll electrostatic oiler for a slitting line at the Alcoa Samara plant in Russia. This is the first Siroll oiler sold into Russia by Siemens VAI. The Siroll electrostatic oiler is designed to provide automated, non-contact, non-pressurized, protective or lubricating coatings (oil, wax or chemicals) to moving metal substrates, in strip or sheet form, accurately and effectively. The result is improved end product quality with reduced wastage and increased yield. Alcoa’s plant in Samara is Russia’s largest producer of fabricated aluminium. The plant is one of the two producing facilities of Alcoa Russia that combined hold about 50% of the domestic mill products market. Alcoa acquired its facilities in Russia in 2005 and has since invested about USD750 million for their total upgrade. www.industry.siemens.com as finishing to be both flexance, reducing lead times and ‘what if?’ scenarios. Comible and transparent. Plan- achieving consistent delivery menting the advantages of ners face multiple challenges dates while maximising pro- the Quintiq solution Periklis in this process. The Company ductivity and reducing inven- Tsahageas, the project’s man- Planner helps to map each tories.ager at Elval, says: “Within planning action including The Company Planner the first three months from specifications, delivery due and Scheduler consider Company Planner’s Finite dates, constraints and shift- changes in production – for Capacity Planning Go-Live, ing bottlenecks, as well as example material defects, the KPI measurement frame- planners’ decisions and their shutdowns and maintework has shown a reduction consequences. It plans job nance work – and allow of the manufacturing cycle orders created by the Routing daily (re)planning, real-time times by almost 30 percent Generator, which went live reporting and analysis of KPIs. for some products. During last year. With the solution In addition, it saves time in the last twelve months, deliv- components it is possible to developing or adapting plans ery lead times for some prod- improve delivery perform- and offers the modelling of ucts have been reduced by 25 ALU_191X295_engl:Layout 1 24.08.2009 16:38 Uhr Seite 1 ALUMINIUM 2010 8 th World Trade Fair & Conference ROLLING The world’s number 1 meeting place for aluminium innovations | products | technologies ideas | applications | networking 14 - 16 September, Exhibition Centre Essen www.aluminium-messe.com Organiser: Institutional Patron: Partner: 5 percent and even 50 percent in some cases. Finally, the system has given us the ability to ‘predict’ the short-term future much more precisely than was possible before and take appropriate corrective actions.” Quintiq’s planning tools are widely used in the aluminium industry. The software company points to a market share of 35 percent of all rolled products, being planned by Quintiq worldwide. www.elval.gr
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APT <strong>ALU</strong>MINIUM NEWS 4 | 12-2009<br />
Reduction of lead times by 25 to 50 percent<br />
Elval live with Quintiq Company Planner<br />
Elval S.A., the sole Greek<br />
producer of rolled aluminium<br />
products, has gone live<br />
with the Quintiq Company<br />
Planner since April. To optimise<br />
the supply chain, the<br />
company is implementing<br />
an ambitious programme<br />
using also Quintiq’s Hot<br />
Mill, Cold Mill, Foil, Melt-<br />
Cast Schedulers and Routing<br />
Generator. Elval’s aim:<br />
to maximise capacity utilisation,<br />
to reduce inventory<br />
and to improve delivery<br />
performance. Elval uses as<br />
a backbone SAP, entirely<br />
integrated with the Quintiq<br />
solution.<br />
Elval produces aluminium<br />
foil for flexible packaging, lacquered<br />
can-end stock, coated<br />
aluminium strip for building<br />
and construction applications,<br />
as well as special magnesium<br />
alloys for shipbuilding,<br />
automotive and printing.<br />
In such a diverse production<br />
environment, world class<br />
planning and scheduling is<br />
an important success factor to<br />
maximize the performance of<br />
the plant.<br />
The processing of rolled<br />
aluminium products requires<br />
planning of various production<br />
flows, such as casting,<br />
hot- and cold-rolling as well<br />
Siemens supplies<br />
reversing rolling mill<br />
to China<br />
Chalco North East Light<br />
Alloy Company Ltd, a subsidiary<br />
of Chinalco, has<br />
ordered a single-pass reversing<br />
finishing mill with twin<br />
coiler from Siemens VAI<br />
Metals Technologies. The<br />
project is part of a hot and<br />
cold mill expansion which<br />
will be erected in Harbin.<br />
The order is worth some 13<br />
million euros and includes<br />
key electrical and mechanical<br />
components together<br />
with the automation and<br />
process technology. The<br />
new rolling mill is scheduled<br />
to start production<br />
in August 2011.<br />
Chalco North East Light<br />
Alloy (Chalco Nela), based<br />
in Harbin in the northern<br />
Chinese province of Heilongjiang,<br />
produces plate and<br />
sheet, strip, foil, tube and pipe<br />
from aluminium, magnesium<br />
and Al-Mg alloys. The<br />
company’s products are used<br />
mainly in aviation, transport<br />
and communication as well<br />
as the electronics and lighting<br />
industry. The new reversing<br />
mill will increase Chalco<br />
Nela’s strip production capacity<br />
by 210,000 tonnes per year<br />
and allow production of end<br />
products of increased hardness<br />
and reduced thickness at<br />
enhanced quality levels. The<br />
plant has been designed for<br />
rolling strip with a width of<br />
up to 2,100 millimeters at a<br />
speed of up to 363 meters per<br />
minute.<br />
The finishing mill comprises<br />
a 4-high stand with<br />
automatic hydraulic gauge<br />
control as well as positive and<br />
negative work roll bending.<br />
Siroll ISV Sprays are used for<br />
spray cooling. In addition to<br />
the mechanical equipment,<br />
Siemens will be supplying the<br />
entire automation system and<br />
the drive technology for the<br />
rolling mill as well as thickness<br />
and profile measurement<br />
systems and the sensor<br />
technology. The automation<br />
system embraces the basic<br />
automation, including the<br />
technological controllers and<br />
the operating and monitoring<br />
equipment.<br />
The scope of supply also<br />
includes the process automation<br />
equipment for the entire<br />
hot strip mill, which also<br />
comprises a reversing roughing<br />
mill to be supplied by a<br />
local vendor. This degree of<br />
system compatibility ensures<br />
a consistently high product<br />
quality. All the systems and<br />
components belong to the<br />
‘Siroll Alu’ integrated solution<br />
platform from Siemens for<br />
aluminium rolling mills. Siemens<br />
will also be responsible<br />
for commissioning the plant<br />
and training the customer’s<br />
personnel.<br />
Siemens to supply<br />
Siroll oiler to Alcoa<br />
Samara<br />
Siemens VAI Metals Technologies<br />
has received an order<br />
to supply a Siroll electrostatic<br />
oiler for a slitting line at the<br />
Alcoa Samara plant in Russia.<br />
This is the first Siroll oiler sold<br />
into Russia by Siemens VAI.<br />
The Siroll electrostatic<br />
oiler is designed to provide<br />
automated, non-contact,<br />
non-pressurized, protective<br />
or lubricating coatings (oil,<br />
wax or chemicals) to moving<br />
metal substrates, in strip<br />
or sheet form, accurately<br />
and effectively. The result is<br />
improved end product quality<br />
with reduced wastage and<br />
increased yield. Alcoa’s plant<br />
in Samara is Russia’s largest<br />
producer of fabricated aluminium.<br />
The plant is one of<br />
the two producing facilities of<br />
Alcoa Russia that combined<br />
hold about 50% of the domestic<br />
mill products market.<br />
Alcoa acquired its facilities in<br />
Russia in 2005 and has since<br />
invested about USD750 million<br />
for their total upgrade.<br />
www.industry.siemens.com<br />
as finishing to be both flexance, reducing lead times and ‘what if?’ scenarios. Comible<br />
and transparent. Plan- achieving consistent delivery menting the advantages of<br />
ners face multiple challenges dates while maximising pro- the Quintiq solution Periklis<br />
in this process. The Company ductivity and reducing inven- Tsahageas, the project’s man-<br />
Planner helps to map each tories.ager<br />
at Elval, says: “Within<br />
planning action including The Company Planner the first three months from<br />
specifications, delivery due and Scheduler consider Company Planner’s Finite<br />
dates, constraints and shift- changes in production – for Capacity Planning Go-Live,<br />
ing bottlenecks, as well as example material defects, the KPI measurement frame-<br />
planners’ decisions and their shutdowns and maintework has shown a reduction<br />
consequences. It plans job nance work – and allow of the manufacturing cycle<br />
orders created by the Routing daily (re)planning, real-time times by almost 30 percent<br />
Generator, which went live reporting and analysis of KPIs. for some products. During<br />
last year. With the solution In addition, it saves time in the last twelve months, deliv-<br />
components it is possible to developing or adapting plans ery lead times for some prod-<br />
improve delivery perform- and offers the modelling of ucts have been reduced by 25<br />
<strong>ALU</strong>_191X295_engl:Layout 1 24.08.2009 16:38 Uhr Seite 1<br />
<strong>ALU</strong>MINIUM 2010<br />
8 th World Trade Fair & Conference<br />
ROLLING<br />
The world’s number 1<br />
meeting place for aluminium<br />
innovations | products | technologies<br />
ideas | applications | networking<br />
14 - 16 September, Exhibition Centre Essen<br />
www.aluminium-messe.com<br />
Organiser: Institutional Patron: Partner:<br />
5<br />
percent and even 50 percent<br />
in some cases. Finally, the<br />
system has given us the ability<br />
to ‘predict’ the short-term<br />
future much more precisely<br />
than was possible before and<br />
take appropriate corrective<br />
actions.” Quintiq’s planning<br />
tools are widely used in the<br />
aluminium industry. The<br />
software company points to<br />
a market share of 35 percent<br />
of all rolled products, being<br />
planned by Quintiq worldwide.<br />
www.elval.gr
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