NEW YORK — Lead times for aerospace aluminum alloys are expected to pare back next year as more capacity for the value-added products comes online, market sources told AMM.
Lead times are fairly robust at between three and five months, down slightly from as high as six months earlier this fall, but service center sources maintain that they could come in noticeably early next year.
"I think lead times will shorten," one service center source said, noting that 2013 supply looks poised to outpace an expected pickup in demand.
"There is a certain amount of pent-up demand because airlines all ... need to upgrade their planes. A 20-year-old 737 is not going to get the kind of mileage a new one will get. (But) every plate mill doubled their capacity in anticipation of the big aerospace push," he said. "They’re all putting millions into their aerospace capacity, but how long will that (demand) last if everyone has more capacity?"
Alcoa Inc., Kaiser Aluminum Corp. and Constellium—the three largest domestic producers of aerospace alloys—have all invested heavily in aerospace capacity this year.
Additionally, earlier expectations that the market would be tight following a seven-week strike at Constellium’s Ravenswood, W.Va., rolling mill were quelled after Constellium and United Steelworkers union Local 5668 reached a new five-year contract late last month (amm.com, Sept. 20). Constellium began ramping up capacity in late September (amm.com, Sept. 28), and a spokeswoman told AMM Thursday that the mill was back at full production.
A second service center source agreed that lead times might shorten in early 2013 as a result. "I do think there’s a lot of capacity out there. It is possible that (lead times) might tighten (especially) now that Constellium has come back to full strength," he said.
But while many say lead times will shrink in 2013, most agree they will hold firm through at least year-end as demand remains robust.
"I haven’t really seen much of a change. They haven’t gone out and they haven’t come in (much)," the second service center said. "There is tightness for aerospace 7000-series. The demand is there and continues to be there."
If the Constellium strike lasted longer, lead times might have pushed out more dramatically (amm.com, Aug. 8), but most market players agreed that the impact was minimal.
"I think they handled it pretty well actually. They brought staff in to run (equipment) that needed to be run. We haven’t seen a major interruption. It was a very smooth transition," the second service center source said of the strike.
"I think Constellium’s competitors, distributors and end-users all prepared for the strike. There wasn’t a real impact (on lead times)," a third service center source agreed.
"I do think the (effects) of the strike would have been more severe if it lasted much longer," the first service center said. "We would have had to scramble to find metal in other places."