Aluminum heat-treat plate has seen its share
of turbulence, with aircraft program delays pushing the market
from its lofty heights to a lull in the latter half of last
year. And while the depth of the drop wasn't quite enough to
send frequent flyers reaching for a paper-bag, the once red-hot
market certainly left more than a few feeling a little
Just a little more than a year ago heat-treat
plate was on allocation, but setbacks to major commercial
airplane programs-the Airbus SAS A380 and Boeing Co.'s 787
Dreamliner-resulted in discounts of 5 percent to nearly 15
percent off the book value.
But that wasn't necessarily all bad. In fact,
when shipments of heat-treat plate from Alcan Rolled
Products-Ravenswood LLC, Ravenswood, W.Va., were disrupted in
March due to a failure of a critical piece of equipment,
several market players noted that it was advantageous timing
because the market was in need of some tightening.
Now the market could be gearing up to take
flight again amid rising demand for aerospace- and
defense-related products, especially in emerging overseas
Michael Goldberg, president and chief
executive officer of Franklin Park, Ill.-based service center
chain A.M. Castle & Co., said that while the market still
remains somewhat stalled, there are indicators on the horizon
that could be cause for optimism. "We are anticipating some
pull through on the A380 in the second half of the year as
production starts to ramp up, and that is a critical factor to
us and to the whole marketplace as a major consumer of
heat-treated plate," he said.
Just how important is it for aluminum
producers that Airbus ramp up production of the A380? Well,
there are about 2.2 million pounds of heat-treated plate on
every A380. Should Airbus ever reach its forecast of 30
aircraft annually, it would equal the amount of aluminum
heat-treat plate used in approximately 270 smaller A320s.
Goldberg said there are two stages to the
recovery. "I think there is the shedding of the current
over-inventory situation in parts and all sorts of things,
which is still going to play itself out," he said. "And then
the second part will be just the incremental demand, which
would put the whole market into a better balance."
One producer that has a more bullish outlook
is Kaiser Aluminum Corp., Foothill Ranch, Calif., which sees
higher production rates and massive order backlogs leading to
extremely favorable market conditions that should continue for
at least the next seven years.
Keith Harvey, Kaiser Aluminum's vice
president of sales and marketing of aerospace and general
engineering products, freely admits that the delays to Boeing's
787 Dreamliner program and by Airbus have "taken the edge off"
of the heat-treat plate market. However, he said the market is
now booming due to incredible global demand.
In the past several years, Kaiser has more
than doubled heat-treat plate capacity at its Trentwood, Wash.,
rolling mill via a $139-million expansion that included the
addition of an 82-mega-newton heavy-gauge stretcher, multiple
horizontal heat-treat furnaces, self-guided material handling
equipment and a "tankless" ultrasonic inspection system.
"Exports are saving the day," Harvey said,
noting that robust orders during the past two years have pushed
backlogs of large commercial aircraft to close to 7,000 units,
equal to about seven years' production for Airbus and
Rising demand for aerospace- and
defense-related products led Kaiser to more than double its
first-quarter net income to $39.1 million from $17.1 million in
the same period last year on sales that rose just 1.7 percent
to $399 million (AMM, May 9).
Countries like Brazil, China, India and
Russia also now have budding air-travel industries. "At the end
of the day, we're talking about a billion people that are
starting to fly," Harvey said.
Another issue facing aluminum producers is
the encroachment of carbon fiber composites. With the cost of
oil and jet fuel at record levels, aircraft manufacturers are
increasingly requiring reduced fuel burn, greater payload,
extended range and reduced maintenance costs.
Alcoa Inc., Pittsburgh, driven by the need
for lighter materials, has been one of the leaders in
developing advanced aluminum-lithium composites, which can cut
the weight gap between aluminum and carbon fiber composites by
half and can be manufactured by mostly traditional techniques.
New-generation aluminum-lithium alloys also provide excellent
corrosion resistance, good spectrum fatigue crack growth
performance and a good strength-and-toughness combination. But
the trade-off is that it is still about four or five times more
expensive to produce that traditional heat-treat aluminum
In order to push the new alloys, Alcoa has
been working with Bombardier Aerospace. The airplane
manufacturer announced early this year that its new C Series
aircraft, which should be ready for delivery by 2012, will have
a fuselage made largely of composites and aluminum-lithium
alloys in its structures. Because Bombardier is a smaller
company than Boeing and Airbus, it can often push its strategy
forward more quickly than its larger rivals.