NEW YORK, Nov 22: Plunging US auto sales have slammed the metals industry, but the sector expects an eventual boost from a trend toward greener cars, although the mix of metals used will change.

“As the economic downturn causes people to postpone vehicle buying, automakers are adjusting their production, which means volume requirements are down for all of their supplies,” said Charles Belbin, spokesman for US-based Novelis, the largest aluminium sheet supplier to the US and European auto sectors.

In October, US auto sales slid 32 per cent, to lows unseen in 25 years, hitting every major automaker. Auto industry inventories rose to an alarming 98 days worth of supplies.

US auto production for the year to Nov. 15 slid a steep 16.7 per cent from last year to the lowest build rate in 15 years. Automakers are announcing new cuts almost daily.

“We estimate that the drop in the country’s automobile output will remove about two per cent of domestic copper consumption this year, making a substantial contribution to our forecast of a near six per cent year-on-year drop in the country’s domestic copper demand in 2008,” BNP Paribas analyst Micheal Widmer wrote this week in a research note.

He also forecast that the US automotive industry slowdown will reduce US lead demand by 1.5 per cent this year.Elsewhere, warehouse stocks of zinc, used to galvanize steel sheet on car bodies, are up 125 per cent from last year.

“Anyone who is a supplier to the auto industry certainly is feeling it, as is Novelis,” said Belbin.

But for aluminium, he and others said near-term cuts have been offset somewhat by new applications that use greater amounts of the shiny metal. That trend has been growing in the auto industry for at least 30 years.

Before it gets better, however, analysts expect the near- to medium-term auto industry story to get worse.

Patricia Mohr, economist at Scotiabank Group in Toronto, said US motor vehicle production (cars and light trucks) averaged about 12 million units per year from 1993 to 2007.She forecasts US output will drop to about 9 million units in 2008, and fall further in 2009 to 8.5 million units.

Harbour Intelligence senior analyst Jorge Vazquez looked at US aluminium inventory trends, auto sales and production data and extrapolated a 30 per cent or greater year-on-year decline in aluminium demand from the US auto sector this quarter.

“We believe the first quarter of 2009 will continue to be as negative as the current quarter,” he added.At its recent third-quarter presentation, Alcoa Inc, which supplies aluminium to the world’s major auto producers, characterised the sector outlook with a large downward arrow.

CFO Chuck MacLane said Alcoa’s “automotive exposure is heavily leveraged to the Big Three” (US automakers) whose production is down nearly 25 per cent from last year.

US car makers have been struggling for some time to the advantage of many foreign companies selling in the US market.

But lately, no one is immune to the recession.

Accelerated buying in emerging markets like China, India, Vietnam and Eastern Europe had more than made up for the loss in the US market, but that trend is turning too.This week for example, top Japanese automaker Toyota Motor Corp said it would stop all North American factories for two days next month. The next day it announced output cuts at a car plant in Thailand, due to sliding sales there.

In China, third quarter auto sales tumbled 15 per cent.

“The deceleration in China’s expansion of car and commercial vehicle production will likely reduce potential domestic lead and copper demand by 0.5 per cent and 1 per cent respectively in 2008, said Widmer.

Changing the mix