CRU Aluminum: Apollo Management Group Set to Acquire Arconic

Arconic’s assets are storied, long-time cornerstones of North American aluminum semis manufacturing: rolled products, extrusions, and wire-rod-bar operations at Davenport, Iowa; Lancaster, Pa.; Knoxville, Tenn.; Lafayette, Ind., and Massena, New York, respectively. With established strategic supply chain relationships with aerospace, ground transportation, beverage can, consumer durable, and building products end-use segments, Arconic’s diverse portfolio looks to tap into the growth that CRU has forecast.

For the period 2022-2027, CRU models US flat-rolled products demand to increase by 1.428 million metric tonnes. Transportation applications, aerospace, automotive, truck, and truck trailer applications will draw 46% of that new demand. Beverage packaging will play a significant role in that demand growth, taking more than 30% of the expected growth in rolled-products consumption.

While Arconic is not a part of the new wave of US rolling mill investments that are set to begin production during this period, it does have an established position in these two key end-use segments, where product qualification and ramp-up are prolonged processes.

The $3-billion Apollo offering, and market momentum, seem a welcome match for Arconic’s aluminum operations’ history. Despite the near-term demand doldrums in beverage packaging and construction end-use applications, Arconic’s portfolio play affords some insulation from demand volatility. While nearby seasonal demand is still a question, the extended forecast for aluminum demand is squarely aligned with Arconic’s production capabilities and underpins the deal.

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By Stephen Williamson, CRU Research Manager, stephen.williamson@crugroup.com