NEW YORK Aluminum
producers and fabricators are gearing up for an expected spike
in demand from building and construction end markets following
the destruction caused by Hurricane Sandy, though the overall
economy remains the biggest factor in the aluminum
"No one likes to talk about it,
but there is a huge economic boost (in manufacturing) when you
have these disasters. Its the silver lining," one primary
aluminum producer told AMM. "And extruders will see
the benefit of that."
An aluminum extruder source
agreed, noting that the rebuilding could help trigger some
growth in a recently lackluster segment.
"Obviously the commercial
building sector is looking very strong next year to replace
whats been lost. Out east, anything related to building
and construction will see a significant spike," the extruder
Construction markets experienced
sharp boosts after Hurricane Katrina in 2005 and Hurricane
Andrew in 1992, and sources expect a similar trend to happen as
early as May.
"Things are just starting to
pick up for (building and construction). Now, for a terrible
reason, they will pick up even more," the extruder added.
Automotive is another
aluminum-intensive industry that could benefit from Sandy as
thousands of cars stand to be replaced. Although steel makes up
the majority of most vehicles, aluminum producers and analysts
estimate that the average content of aluminum per vehicle is
still about 343 pounds today and growing with many consecutive
"I saw pictures of hundreds of
yellow cabs flooded in a parking lot. My first thought was,
I wonder if they were GM, Chrysler or Ford," an
aluminum distributor said. "(Whoever made them) will have to
make a few hundred extra cabs."
However, most agree any uptick
in automotive demand as a result of Sandy will have little
overall impact on the aluminum sector given the current rates
of automotive production.
"If you think the U.S. auto
industry is making something like 14 million cars, and a couple
hundred thousand were destroyed and two-thirds of that has to
be replaced, more often than not, those cars will be replaced
off of the used market, which is already in short supply.
Thats not going to help the automakers," the distributor
And while sources agree the
effects of Sandy could temporarily boost some major aluminum
end-use sectors, the most important factor for the light metal
is the overall economy.
A second extruder told
AMM he wants to add more capacity to meet increased
demand from the building and construction and automotive
markets next year, but hes concerned that business could
"We would love the opportunity
(to add more capacity)," he said. "But it depends on what
drives (the economy). I really dont know what direction
the economy will go. And right now, its not an
environment to take risk."
"The economy doesnt seem
to be growing legs," the distributor agreed. "When Katrina hit
New Orleans, the steel industry had a short surge in certain
products for construction, but it went away."