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Aluminum shipments rise, but nerves mounting

Keywords: Tags  Metals Service Center Institute, MSCI, aluminum, service centers, fiscal cliff, Suzy Waite

NEW YORK — Aluminum shipments by U.S. service centers logged a double-digit percentage rise in October compared with September, but with many distributors remaining wary about the impending "fiscal cliff" in Washington, most say the industry is not out of the woods just yet.

U.S. service centers shipped a total of 125,000 tons in October, up 11.1 percent from 112,500 tons in September but down about 2 percent compared with 128,000 tons in October 2011, according to data compiled by the Metals Service Center Institute (MSCI). The month-over-month increase in shipments led to a 9-percent drop in inventories in October, with U.S. service centers holding three months’ worth of material on their floors compared with 3.3 months’ worth in September.

Canadian service centers also saw a slight boost, shipping 14,000 tons in October, up from 12,300 tons in both September 2012 and October 2011. Canadian distributors held 2.8 months’ worth of aluminum on their floors last month, down from 3.2 months’ in September, MSCI data show.

On a tons-per-day basis, however, U.S. shipments were down slightly, falling to 5,400 tons a day in the longer October month from 5,900 tons a day in September in the United States.

And while total shipment levels were up to start the fourth quarter, most service center sources said concern is mounting going into year-end.

"I would say the mood is mildly pessimistic," one service center source told AMM. "Now sales aren’t keeping up and everyone has too much inventory. I don’t see any service centers loading up on stock for a few months."

He said he’s hopeful the negative sentiment is simply seasonal. "Who knows? (Orders) could spring right back in January," he said.

A second service center source pointed to the looming fiscal cliff, saying that if certain tax cuts implemented by former president George W. Bush aren’t renewed, the manufacturing industry could be stifled next year.

But the first source said he’s not so bearish.

"Let’s face it: It doesn’t get as gloomy as the gloomers and doomers say it will, and nirvana doesn’t go on as long as the Pollyannas say it will. Markets go up, markets go down. There is some pessimism now, but nevertheless, business is getting done. Look at the numbers. Shipments are similar to where they were a year ago," he said.

He said he has already received a number of orders for early next year, an upbeat sign that the world is not coming to an end.

"We’re still busy with really tiny orders, (and) we started to get a little more orders from customers willing to go forward," he said.

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