Constellium (CSTM -1.51%) is a downstream aluminum producer engaged in the design, manufacture, and sale of specialty rolled and extruded aluminum products. The Netherlands-based company, which offers its products primarily to the aerospace, automotive, and packaging industries, is a world leader in the manufacturing of high-quality aluminum products and solutions.

Aluminum demand is expected to be strong in 2014. Top U.S. aluminum producer Alcoa (AA) expects global demand growth of 7% and is projecting a deficit of 730,000 tons for the year. Alcoa expects the aerospace market to register the strongest growth in demand, followed by automotive. 

Constellium is making investments to meet demand in these sectors. The company offers investors one of the better ways to gain exposure to these fast-growing aluminum markets without the commodity risk.

Aerospace market
With backlogs at aircraft original equipment manufacturers, or OEMs, such as Boeing (BA -1.08%) and Airbus (EADSY -2.31%) at all-time highs, and with aluminum taking share on aircraft design, Constellium remains confident about the future of its aircraft business. Moreover, with 90% of this business under long-term contract, Constellium has a fair degree of insulation from economic uncertainty. 

Source: Company documents.

Robust demand for both large commercial aircraft and regional jets, along with continued growth in the business jet market, is driving strong aluminum demand in the aerospace sector. Constellium is the market leader in aerospace plate worldwide and is looking to continue to take share. 

Constellium expects total airplane deliveries to grow at a compound annual growth rate of 8% from 2012-2017. The company remains confident that its high-margin Airware technology will help it grow market share. Compared to traditional solutions, Airware generates higher EBITDA per ton and commands longer contracts with aircraft OEMs. The Dutch company argues that its technology is several years ahead of competitive offerings. 

Airware has already taken share from aluminum on current aircraft production, as demonstrated by the increase in contracted business for the product over the past 12 months. While the company is investing in capacity to meet contracted need, the demand could grow further over time. 

Airware is gaining contractors' attention due to its relatively lower density/weight advantage of 5% and superior corrosion resistance compared to traditional aluminum. Over the longer term, a redesign of planes using Airware could achieve weight savings of 25%. This is a significant opportunity for Constellium, as Airware is a higher-margin product, and the company is investing 70 million euros in casting capacity.

Source: Company Documents.

Automotive market
Constellium is also positioned to benefit from growing aluminum demand in the automotive market. The company forecasts the global aluminum body-in-white, or BIW, market to grow at 45% CAGR from 2012-2015 and 14% CAGR from 2015-2020.

Constellium expects the aluminum body structure market to grow at 10% per annum from 2015-2020, and the aluminum crash management system, or CMS, market to grow at 5% per annum over the same period. Automotive will be the fastest-growing market for Constellium, rising at 18% over the medium term.

Source: Company Documents.

The company is already investing to expand capacity and meet additional demand, including 200 million euros in Europe and additional capital in the U.S. to expand BIW capacity. To supply BIW sheet in North America, Constellium has entered into a joint venture with Japan's UACJ to build a BIW mill at Bowling Green, Ky., for a combined cost of $150 million. The facility will have an initial target capacity of 100,000 tons. 

Source: Company Documents.

Packaging market
While the company's packaging business is not as exciting as aerospace and automotive, it remains an important base load and a generator of free cash flow even through economic ups and downs. Constellium has no plans to exit the business, despite its relatively lower margins.

Source: Company Documents.

Moreover, there are still significant growth opportunities in the international markets, particularly Europe. Unlike the U.S., many parts of the world are still meaningfully transitioning toward a purely aluminum can market. Constellium forecasts the European beverage market transitioning from roughly 78% aluminum today to 85% in 2016. The company currently has a 36% market share; it is well positioned to leverage a projected European can stock consumption increase to 955,000 tons in 2017 from 866,000 tons in 2012.

Source: Company Documents.

Foolish wrap-up
Constellium offers investors exposure to growing aerospace and automotive markets without the commodity risk. The company remains strongly positioned to benefit from growing aluminum demand in these markets and increased market penetration of its Airware product. While the packaging segment provides earnings visibility, it also has growth opportunities in the international markets, particularly Europe.