The aluminum industry in Italy in 2020, problems and prospects
All the sectors of the Italian aluminum industry closed 2020 with heavy decreases in production and turnover. But the light metal will be among the protagonists of the Next Generation EU program. The point of Mauro Cibaldi, president of Cetroal.
2020 will be remembered for a long time by everyone as the year of the "COVID-19 pandemic". A microscopic virus has triggered one of the greatest health crises, comparable perhaps only to the "Plague" of the sixteenth century, which in a very short time had unimaginable economic and social impacts a year ago.
Italy, after China, was the nation that first faced, from Western countries, the spread of the first wave of the virus, without having a specific cure, or a well-defined plan of action, thus leading the Government to drastic choices including the total closure of many work activities, services, schools. This was certainly the most problematic aspect of the health pandemic, which has severely impacted many sectors, and it is estimated that it will reduce the national annual GDP by about 10%, not even sparing our sector: aluminum producers and processors, represented in Centroal.
Starting from the directives of the DPCM of 22 March 2020 which did not consider the metallurgical sector as one of the fundamental ones (the Ateco 24 code was excluded from the list of activities that could continue to operate), all the activities in the sector had activities from 23 March to 4 May 2020, with rare exceptions, including companies dedicated to the production of food or pharmaceutical aluminum packaging, recognized as serving indispensable activities.
Extrusion, refining, and the realities dedicated to the production of castings have consequently had a strong impact both in the production and in the revenues and in the economy of their work, bringing the most fragile realities even to insolvency procedures (fortunately in a number very limited). The laminates intended for the production of food and pharmaceutical packaging, on the other hand, have managed to keep their production lines active, but have to stop all non-essential productions such as those aimed at automotive, mechanical, aerospace. All this has led to a significant decline in every sector, as noted by Cetroal.
The refining of secondary or semi-primary alloy ingots, combined with the castings market, showed an even more marked negative aspect. The sector was already experiencing a fairly difficult period in the automotive sector, struggling to transition from thermal engines to hybrid ones before reaching fully electric ones. The pandemic has completely blocked the sale of motor vehicles (an "unnecessary" asset when people cannot move because they are placed in "lockdown", with decreases in the sector of car sales to individuals by up to 97% - April '20 to March ' 20).
The sector therefore found itself in the middle of the year with decreases close to 40%, compared to the same period of the previous year. Even for these operators, however, on one hand the very strong economic recovery that took place in China - the first nation to emerge from the health emergency of COVID-19 - which required a large quantity of aluminum alloy ingots, also importing them from Italy, and on the other hand, the boost coming from a series of European incentives on new low-emission vehicle projects, has made it possible to partially recover the decline in the first half of the year and projected to reach a decrease of just under 20% for 2020.
The same trend also applies to the production of castings, which should close the year with a negative figure of about 18% compared to the previous year.
The drops in the individual sectors could not fail to have repercussions at a national level on aluminum consumption, which will amount to one million and eight hundred and twenty thousand tons, with a reduction of about 12%, bringing the estimated per capita consumption for 2020 to about 30kg. /person.
In our sector, these declines represent the deepest crisis that has occurred in this century, even worse than that of 2008, triggered at that time by a financial crisis, which exploded clearly after the failure of the American investment bank Lehman Brothers.
In the Italian aluminum industry, 2020 cannot and must not, however, be seen only as a negative year
From every crisis we must know how to grasp the positive sides, reorganize and start again with greater enthusiasm towards the future. This is what can be seen in various sectors. Starting for example from the health sector, there are many examples of courage and resourcefulness of people or companies that have used their ingenuity to counter COVID-19. In fact, there have been small start-ups that have been busy. ISINNOVA, for example, has been able to create medical devices to allow patients to inhale oxygen and continue to breathe through a laser printer and a diving mask available in the large-scale retail trade, saving many lives.
Another example of resilience can be found in the school environment, where schools have demonstrated an ability to adapt to total closure, introducing the DAD (distance learning), which, among a thousand problems and defects, has helped pupils to continue their educational path. Surely the face-to-face lessons are unparalleled, but the school has tried not to stop in this way.
This was also the case in our sector, the Italian aluminum industry, where the entrepreneurial ability typical of us Italians was able to keep the supply chain compact and at least partially recover the lack of production by working, when possible, on Saturdays and for a large part of the August, also encouraging correct behavior among its stakeholders, both health and ethical-social.
The most stimulating and rich in prospects for our sector will come from the decisions of the European Commission. After periods of drift towards individual nationalisms, faced with the effects of the epidemic on the European economic and production system, the Commission approved the "Next Generation EU" program, of an extraordinary nature and size.
The mechanism, so-called "For recovery and resilience", provides 672.5 billion euros (312.5 billion in subsidies 360 in loans) to support the economic, social and productive systems of the various member countries of the European Union, setting clear priorities for its use. Among these, in the fundamental guidelines for European development for the next decade, the ecological transaction, energy efficiency and technological development (in the so-called Green Deal plan) have been indicated, three elements that can well be associated with aluminum and to its use.
The environmental and energy performance associated with production and processing, added to the infinite applications of our material, which affect every aspect of the citizen's daily life and the broad market prospects expected to grow, make aluminum the "material of the future". Aluminum is in fact ideal for guiding the environmental and energy transition of Italy and the European Union because it would allow the achievement of the guidelines through:
• the reduction of climate-altering gas emissions;
• the energy efficiency of the production chains;
• the production of eco-compatible materials;
• the implementation of the circular economy.
The Italian aluminum industry must be a reference for the development of the country's industrial policies because:
A. aluminum contributes to saving energy and cutting CO2 emissions in many key sectors:
- giving lightness to all kinds of means of transport, from aviation to naval, passing through trains and vehicles of all types;
- making packaging more efficient in terms of use and recyclability;
- allowing the construction of energy-efficient buildings.
B. The aluminum industry in Italy is 100% based on the endless recycling of scrap, which in industrial uses:
- reduces the disposal of obsolete artifacts;
- reduces global CO emissions associated with the production of primary aluminum by 95% (currently not present in Italy);
- the circular economy, thanks to the enhancement of aluminum scrap which is a precious "secondary raw material", allows the reduction of the exploitation of terrestrial resources.
Cetroal, with the assistance of Strategic Advice, within the project of AFFG - Alluminium For Future Generation - has adopted the messages indicated by the European Commission to carry forward the key messages of our material in the Italian and European institutional offices, suggesting a series of proposals to help our sector, of which the main ones are: the introduction of mechanisms that incentivize investments in waste recovery and recycling activities, as well as mechanisms to promote products made from recycled and recyclable materials such as aluminum. This can be achieved through a reduction in VAT rates for products made with reclaimed material. It is also necessary to avoid bureaucratic burdens and unnecessary constraints resulting from a restrictive interpretation of the rules in the authorization procedures for waste recovery activities (for example in A.I.A. and End of Waste authorizations).
The promotion of measures aimed at decarbonisation in the automotive sector such as:
• The stabilization of the "Fund for the purchase of vehicles with low CO2g / km emissions", which is currently experimental in nature and will stop at the end of 2021.
• The provision of a temporary premium for cars and commercial vehicles in stock of different power supplies.
• Rewarding for the use of recycled and recyclable materials such as aluminum in the automotive sector, to incentivize investments in ever lighter and more eco-friendly components.
• The compensation of indirect ETS costs for the aluminum industry for the entire period 2021-2030, in line with the provisions of the European Commission, which gives member states the option of doing so. Cost offsetting must be ensured by allocating an appropriate percentage of the ETS auction proceeds. Basically, it is a question of going beyond the allocation, which is still too limited (less than 10% of the revenue from auctions on emission rights), provided for by art. 13 of Law Decree 101/2019 (the so-called "Decree save companies") to overcome the Italian competitiveness gap with the industry of other EU member states.
• The improvement of the energy and environmental performance of the building stock by integrating the current legislation on the "Superbonus 110%" (art. 119 decree law 24/2020, the so-called Relaunch Decree) with the provision of a certification system that quantifies and enhances the percentage of recycled content present in the materials used in construction. The Recovery Plan represents a great opportunity to reward, in the new incentive system for the three-year period 2022-24, building products that have a minimum recycling content equal to 60% of the total, with the provision also of a category that rewards the highest percentages of recycled content.
Of a different tenor, again from Europe, 2020 will also be remembered by the Italian aluminum industry (after years of data collection and rejected requests) as "the year of duties": in fact, the anti-dumping duty on extrusions from China and investigations on laminates and thin sheet imported from the same country have begun. These are important steps in defense of national and European industry. The Commission decision does justice and underlines the commitment to protect the European aluminum industry from the harmful effects of unfair trade. We could no longer afford, among major global markets, to run out of protective measures against the dumping of Chinese aluminum semi-finished products. The effects of these actions will be seen from 2021 onwards, but it all started in 2020. So not only pandemics and negativity in this last leap year, but also prospects for growth and successes for the future!
Source: A&L Aluminium Alloys Pressure Diecasting Foundry Techniques dicembre 2020