While the U.S. aluminum market
could remain in a holding pattern until after the presidential
election, industry observers are at least cautiously
optimistic, with the strong transportation sector driving much
of the growth.
We expect modest but
steady growth for the rest of this year into next year,
Aluminum Association spokesman Stephen Gardner said.
Lloyd OCarroll, senior
vice president of research at Davenport & Co. LLC,
Richmond, Va., agreed, noting that U.S. aluminum demand has
continued to rise even though the rate of growth isnt
quite as robust as it was earlier this year. He expects U.S.
aluminum industry shipments will rise about 8 percent this
year, but will increase just 4 percent in 2013 due to the
impact of the debt crisis in Europe and slower growth in
On the other hand, the Federal
Reserves qualitative easing could start filtering into
the U.S. economy and have a positive effect on domestic
aluminum consumption, said Kamil Wlazly, senior metals analyst
for Metal Bulletin Research. Wlazly noted that the domestic
aluminum market has been fairly flat during the second half of
this year and that watchful distributors arent likely to
make many purchases until November. But producers are
generally bullish that things will improve after the
election, he said.
OCarroll said that while
certain markets, most notably the automotive and aerospace
sectors, remain quite strong, manufacturing in general
isnt doing well enough to improve the aluminum
supply-demand balance, even with the housing market slowly
showing signs of improvement.
We see good, solid growth
in the next 12 to 18 months, Gardner said, especially in
the transportation markets that benefit from aluminums
lightweight properties. There have already been some pockets of
improvement for certain markets that have been struggling since
the economic downturn started, including such building and
construction sectors as metal roofing and multi-family housing
starts, he said.
OCarroll wrote in
Davenports latest quarterly aluminum outlook report that
the market also was being aided by aluminum prices moving
substantially higher after drifting lower during much of the
summer, largely crediting a major fiscal announcement from the
Chinese government as well as monetary spending announcements
from the European Central Bank and the Federal Reserve. He
added that recent production cuts at aluminum smelters also
helped support prices, albeit to a lesser extent.
Looking forward, OCarroll
predicts that the LME cash aluminum price will average $2,047
per tonne in the fourth quarter--down about 16 cents per pound
from a year earlier--and then rise to an average of $2,390 per
tonne in 2013 due to projections for a slight global deficit