U.S. Secondary Aluminum Processors Benefiting from Strong Automotive Production Levels

---

Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). After two years of downsizing and cost reductions in the secondary aluminum industry, which saw firms such as Wabash Alloys and IMCO Recycling close and consolidate many plants, several firms are forecasting increased production due to an increase in demand mainly from the automotive sector. The world's largest producer of secondary aluminum, IMCO Recycling Incorporated (NYSR: IMR) (Irving, Texas), has recently announced both increased earnings and production from its aluminum recycling plants. This can be attributed to the increase in aluminum content in automotive parts and the continuation of high auto production levels. IMCO Recycling has 21 plants in the U.S.

The U.S. secondary aluminum market has even attracted foreign investors. Most notably aluminum giant, Norsk Hydro ASA (NYSE:NHY) (Oslo, Norway) has moved in the U.S. market in a big way. See the related June 11, 2002 article Hydro Aluminum Continues North American Growth and the January 21, 2002 article Hydro Aluminum Investment in North American Secondary Aluminum Sector to exceed $100 Million. Companies incorporating low cost technology and operating know how will perform the best in the future.

Tennessee Aluminum Processors, Incorporated (Columbia, Tennessee) has made several steps forward in increasing its capacity for secondary aluminum production even during the difficult market conditions of the past few years. During a time when many secondary aluminum smelters have been downsizing due to poor market conditions or are feeling the effects of increased environmental regulations to curb emissions, Tennessee Aluminum Processors has continued to grow through a series of strategic acquisitions and expansions.

In early 2000, the company had plans to expand its mother plant located in Mount Pleasant, Tennessee. The plant produces 18 million lbs/month of aluminum remelt secondary ingot (RSI) and had planned the addition of a rotary furnace and a reverb furnace to boost capacity. Those plans were cancelled however when Tennessee Aluminum Processors found a closed secondary aluminum smelter in Gadsden, Alabama for sale, owned by Culp Aluminum Alloys, a division of Leggett and Platt. The price was right and Tennessee Aluminum purchased the closed plant in December of 2000. Tennessee Aluminum Processors plans to add a small 40,000 pound melting furnace at some point in the future at the Gadsden plant.

In the latest of its expansion plans, Tennessee Aluminum Processors has announced that it will construct a new secondary aluminum smelter to supply 10-12 million pounds a month of molten metal to the Logan Aluminum sheet rolling mill in Kentucky. Once the business package is settled, the plant should be up and operating in a year.

Culp Aluminum also operated a 120 million pound a year secondary aluminum plant in Steele, Alabama, which was recently purchased by Wabash Alloys LLC (Wabash, Indiana). Wabash Alloys, with its acquisition of Culp Aluminum's Steele, Alabama plant, notes the first time in years the company has seen positive production growth. This is due to increasing demand for secondary aluminum, mainly for automotive end uses and growth of the automotive industry in the southeastern U.S.

Industrialinfo.com is tracking 654 operational aluminum manufacturing plants in North America as part of its North American Industrial Database. This includes primary and secondary aluminum smelters, foundries, and extruders.