AN ANALYSIS OF THE DECLINE IN ALUMINUM CONSUMPTION GROWTH IN THE UNITED STATES SINCE 1974 (METAL DEMAND)

Aluminum consumption has enjoyed higher growth rates than any other major metal in the post World War II period. Yet, as is true for the other metals, aluminum consumption growth stalled around 1974. This thesis analyzes the decline in aluminum consumption growth in the United States since 1974 relative to the 1950 to 1973 period. The study begins with the examination of macroeconomic factors including changes in the composition of GNP due to trade, the shift to services, and the share of GNP devoted to investment. The analysis proceeds to the sectoral level. Both lower output growth and the reduction in the amount of aluminum used per dollar of output have contributed to lower consumption growth in every sector. The relative importance of these two factors is calculated. A case study of one end use market, the passenger car, completes the analysis. The thesis concludes that lower GNP growth alone is responsible for 20 percent of the decline in consumption growth. The decline in the relative importance of the major aluminum-consuming sectors in the national economy has also contributed to lower growth. Material substitution may exert either a positive or a negative influence, rather than consistently causing a shift away from aluminum use. The single largest contributor to lower aluminum consumption growth is the decline in the rate of market penetration for new applications.