LONDON Aluminum extrusion
demand is expected to grow in the range of 6 to 10 percent in
2013, market participants and analysts said, although they
cautioned that some end-marketsnotably truck
trailercould experience a slowdown in growth.
"Im expecting 2013 to be
good, provided the fiscal cliff gets resolved. It wont be
great, but it will be good," an extruder said.
"Were projecting 7- to
10-percent growth (for extrusions overall)," a second extruder
Automotive is one sector that
will experience an uptick, but not nearly at the same breakneck
pace as this year, sources said.
"(Auto) sales have had a very
strong recovery out of the recession. This is typical in the
first few years of a recovery, when there is some snap back in
big-ticket items like cars," Davenport & Co. LLC research
analyst Tim Hayes said. "We expect that growth rate to slow
Still, Richmond, Va.-based
Davenport is forecasting an 11.3-percent gain in automotive
extrusion shipments to 442 million pounds in 2013 from 397
million pounds this year.
Participants are also encouraged
about heating, ventilation and air-conditioning components
Copper is traditionally used in
HVAC tubing applications, but given the high cost of the red
metalcopper currently costs around four times what
aluminum does on the London Metal Exchangemany HVAC
manufacturers are shifting to aluminum to save money.
The second extruder, who sells
into the HVAC market, expects growth of more than 10 percent
from this sector next year.
Building and construction, which
has been all but dormant since the 2008 recession, is another
market that offers encouragement. It has recently shown signs
of life and is expected to experience an uptick next spring due
to destruction caused by Hurricane Sandy on the East Coast (
amm.com, Nov. 21).
"(Building and construction) is
getting better. Its still not where it was, but its
at least getting better," one producer said.
"A big part of extruders
business is (building and construction) and clearly, without a
doubt, (that sector) is no longer shrinking. (Extruders) feel
the ground has hardened beneath them," a second producer
Davenport is forecasting an
uptick of 5.5 percent in construction shipments to 1.076
billion pounds in 2013, up from 1.02 billion pounds in
"Residential housing will be
better. New starts are growing well, but the repair and
remodeling market, which is larger, is still growing in the
low-single digits. So its not quite hitting on all
cylinders," Hayes said. "But housing will continue to rebound
nicely. Perhaps with a better economy, and more jobs, people
will start to feel comfortable doing repairs and remodeling on
Once residential construction
picks up speed, "it will be very interesting," the second
While most markets are looking
relatively positive, it isnt all good news. Most expect
the truck trailer sector to be significantly slower than in
recent years, experiencing only a slight rise next year.
Davenport forecasts that
aluminum shipments to the trailer market will rise just 2
percent to 359 million pounds in 2013 from 352 million pounds
this year, while heavy and medium truck shipments will remain
flat year-on-year at 105 million pounds.
"Weve seen the trailer
build rates slow down. Theyre tapering off and I think
orders are softening. Watching truck and trailers is a good
barometer of the economy. They were deeply depressed in 2009,
then there was a big snap back in 2010 and 2011, but now
its sort of going back to equilibrium," Hayes said.
Meanwhile, the strength of the
extrusion sector contributed to a tight billet market in 2012,
and participants anticipate more of the same in 2013.
A combination of tight supply
and decent demand pushed contract billet premiums up an average
of 2 cents per pound for next years material, while spot
billet premiums remained at record highs of between 12 and 13
cents per pound for much of 2012.
The North American extrusion
market is paying close attention to developments at
Pittsburgh-based Alcoa Inc.s Aluminerie de Beacancour
Inc. (ABI) smelter in Quebec as talks to renew contracts
covering some 900 workers at the 400,000-tonne-per-year smelter
ABI halted 6063 billet
production due to high iron content (
amm.com, Dec. 13), and extruders continue to keep
an eye out for off-grade material.
A strike or lockout could result
in billet premiums shooting up, although the general mood in
the industry was reasonably upbeat heading into Christmas
"The ABI situation remains a
problem, but I believe its going to be resolved. At this
point, if the two sides were not close to an agreement Im
sure one of them would have taken some action now. That tells
me to expect a positive outcome. ... Of course, the plant will
need some time again to stabilize, but thats normal," a
third extruder said.
"If ABIs (production) goes
away, it will be a very, very brisk environment for billet spot
premiums next year," the second producer said, but added that
if Alcoa and the United Steelworkers union do reach an
agreement there could be "some upward pressure" on premiums in
the summer, although the overall premium growth is expected "to
take a break in 2013."