Industrial aluminum scrap to remain tight in 2011 Nichols

Dec 10, 2010 | 12:22 PM |

Prompt industrial aluminum scrap will remain tight in 2011, according to the chief executive of Quanex Building Products Corp., which owns Nichols Aluminum.

Limited availability of industrial scrap would continue to constrain spreads between average sales prices and raw material cost for Nichols, which primarily makes products for building and construction, David D. Petratis, president and chief executive officer of Houston-based Quanex, said in a recent earnings conference call.

"The spread was constrained this year due to ongoing tightness in the aluminum scrap market, particularly in the availability of industrial scrap due to manufacturing. Nichols is 100-percent scrap driven and we use both clean industrial scrap as well as post-consumer scrap in our mix. [As a result] our raw material spread will continue to be constrained in 2011 because manufacturing is down," he said.

Petratis said the spread between Davenport, Ohio-based Nichols' average sales price and average material cost was up 12 percent year-on-year, indicating better profitability in 2010. The availability of more consumer scrap in the second half of this year had helped drive better margins, he said.....