October 30, 2017 / 3:51 PM / a year ago

LMEWEEK-Trimet sees full-capacity output, to spin off auto parts

* Trimet expects full-capacity aluminium output in 2018

* Looking for partner for automobile parts sector

* For Reuters coverage of LME Week, click on

By Michael Hogan

HAMBURG, Oct 30 (Reuters) - German aluminium producer Trimet Aluminium expects to keep operating at full capacity in 2018 as European demand stays strong, and plans to transfer its automobile parts business into a new joint venture, executive board member Thomas Reuther said.

Trimet produced about 775,000 tonnes of aluminium and cast aluminium products in its 2016/17 financial year that ended on June 30, roughly at full capacity and about the same level as the previous year.

“I am confident we will see robust European demand for aluminium continuing in 2018 from all three main sectors - transport/automotive, construction and packaging,” he told Reuters.

“Fundamental aluminium demand in Europe is likely to remain good and I expect this will keep our plants fully occupied.”

The company has primary aluminium plants in Essen, Hamburg and Voerde, and refineries for secondary aluminium in Gelsenkirchen and Harzgerode. Its aluminium product plants include aluminium wire production in Saint-Jean-de-Maurienne and Castelsarrasin in France.

Trimet has decided to spin off its automobile aluminium products business into a new joint venture, Reuther said. The profitable business has annual sales of about 200 million euros ($232 million) with about 13 million parts produced annually, he said.

“We are currently seeking a partner for this business,” Reuther said. “The problem is that automobile producers want platform suppliers with a global organisation, especially with a presence in North America or China.”

“We are a family-owned company in Europe and we do not have the capability to do this alone. A partner is now being sought who will accompany us in this sector.”

No timescale is being set for the talks, but he said the company is optimistic a satisfactory partner will be found.

General aluminium demand from the automobile industry is expected to remain firm in the new year.

“The automobile industry in Europe is currently focussing intently on electro-mobility and autonomous driving,” he said.

“We are seeing an impulse from electro-mobility as cars will have to be lighter with a larger aluminium content, but the vehicles are still a relatively small part of overall automobile production.”

The background aluminium futures market is expected to remain volatile, with demand in China this winter a critical factor. “But I think the volatility will be at a level the industry can cope with,” he said.

U.S. politics and Britain’s planned exit from the European Union are uncertainties, he said.

Trimet is open to acquiring more plants after taking over another German smelter in Voerde in 2014 and the two works in France in 2013, Reuther said.

“We are not actively searching but if a suitable case for acquisition presented itself which is a good fit for us we would consider it,” he said.

With euro zone interest rates low, spending on real estate is attractive, which is keeping construction demand firm, he said.

Packaging demand is also being fed by sectors including beverage cans, he added, with pressure from foil imports.

Trimet is focusing its investment programme, in double-digit millions of euros, in the coming year to further increase efficiency and flexibility rather than raise capacity, he said.

A “virtual battery” project aims to deal with rising and falling energy supply levels as Germany moves to renewable energy such as wind and solar power.

The electrolysis furnaces at the Essen plant will be used to store heat to compensate for swings in energy supply. ($1 = 0.8614 euros) (Reporting by Michael Hogan; Editing by Dale Hudson)

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