From automotive to aerospace to the upstream and downstream of the entire aluminum chain, the domestic aluminum industry is growing and has the potential to be an even bigger success story for U.S. manufacturing, experts and analysts say, but subsidized production in China, which the Aluminum Association (AA) and others say is leading to unfair and illegal trade practices, threatens the industrys continued health.
Throughout 2016, industry analysts pointed to a variety of issues and concerns.
Tony Rizzuto, equity research analyst, global metals & mining, with New York-based Cowen and Company, says that in aerospace, its becoming increasingly clear that success is very dependent upon (the) right programs, with so many changes in build rates going on right now with wide bodies and A-380 the 777, etc., and obviously higher build rates on the single aisle.
Curt Woodworth, a director and analyst with Credit Suisse, said one of the issues facing a lot of downstream investors outside of just the build rate half for aerospace, is the issue with contract renewals for original equipment manufacturers, and it seems like the OEMs in aero are trying to put a lot more downward pressure, take more value through the chain
Timna Tanners, research analyst, U.S. metals and mining at New York-based Bank of America Merrill Lynch, raised some questions over rolled products and their end-users.
An area that still continues to be a challenge on global rolled products, I am just fascinated about the growth in auto 50 percent year-over-year and yet the ATOI guidance being where it is, and I know that packaging has been a drag, Tanners said. So, I am just trying to take a step back and ask whats the outlook for packaging; what timeframe would we not see that in a negative comment on packaging; when can that stabilize or what is the outlook for that industry?
North American aluminum demand inched up in 2015 while primary production decreased, according to data released by the AA Nov. 21.
Aluminum demand, a metric that includes producer net shipments and imports, increased by 0.8 percent from 2014 to 2015, totaling 25.5 billion pounds (11.6 million tonnes), the AA said. Meanwhile, primary production decreased 2.2 percent, totaling 9.8 billion pounds (4.4 million tonnes) in 2015.
Imports of aluminum ingot, semi-fabricated products and scrap also grew year on year in 2015, increasing by 4 percent to 12.2 billion pounds (5.5 million tonnes). In particular, shipments from China jumped 30.7 percent over 2014 levels, the association noted.
In addition to those domestic and global issues, the question trade continues to occupy the minds of aluminum producers.
Weve seen a lot of activity on our fair trade efforts, Mike Bless, president and CEO, Century Aluminum Company, said.