End customer markets

As a consequence of the acquisition of Noranda downstream, the automotive industry’s share of Gränges sales volume has decreased from almost 90 per cent to around half.

Sales to the stationary heat exchanger industry, primarily in air conditioning, today accounts for around half of sales in North America, and for almost a quarter of total sales. Furthermore, entirely new end-customer markets such as transformers and food packaging have become significant parts of Gränges’ operations. These developments offer considerable growth opportunities, as well as a reduced risk and reduced exposure to the automotive industry.

The automotive industry

The market for rolled products for aluminium heat exchangers closely correlates with global vehicle production, but is also affected by the number of heat exchangers per vehicle, which tends to increase in line with demands for such things as improved comfort. Growth in the automotive industry increased approximately 2.3 per cent (4) globally in 2017. Forecasts suggest average annual growth of around 2.1 per cent between 2018 and 2020, according to market analyst IHS. Since the 1990s, brazed aluminium heat exchangers have successively increased market share in the automotive industry at the expense of copperbased and mechanically assembled heat exchangers. Brazed heat exchangers amount to close to 100 per cent of the market.

The stationary heat exchanger industry (HVAC)

HVAC includes heating and cooling systems for residential housing, and commercial and industrial property. The market for heat exchanger materials for HVAC is estimated to be as significant as the automotive industry. The underlying growth factor for heat exchangers in HVAC, regardless of type, is global construction investment, which is expected to continue to grow to 2020. In time, brazed aluminium heat exchangers, which today account for only a few per cent of the total market, are expected to replace conventional mechanically assembled solutions. Expectations are that manufacturers of stationary heat exchangers will convert to brazed aluminium heat exchangers, in a similar way to the automotive industry. Demand for rolled products for brazed heat exchangers in this industry is therefore expected to increase by some 15 per cent per year to 2020.

Other markets

Aluminium foil provides a complete barrier to light, oxygen, moisture and bacteria. These properties make it ideal for food cartons and pouches. Container foil is divided into three major categories: household/institutional foil, semi-rigid containers and flexible packaging. For decades, the use of foil has grown steadily in each of these categories. Semi-rigid containers are among the most versatile of all types of packaging and are widely used for pre-packaged foods, easily withstanding great differences in temperature from freezing to heating. Gränges is a major supplier in this market with a leading position within the semi-rigid container category in North America. As consumers are becoming increasingly dependent on ready-to-eat foods and beverages, the demand for aluminium foils for consumer packaging purposes will rise.

Another end-market in North America is materials for transformers. A transformer is an electrical device used to increase or decrease the alternating voltages in electric power applications. It consists of two or more coils called windings, which are wrapped around a core. In North America, aluminium is becoming more common as winding material in distribution transformers, while copper is more common for large power transformers. Aluminium has significant cost and weight advantages over copper. Gränges is the leading producer of high conductivity aluminium strips for electrical transformers used by utility providers and industrial companies in North America.