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Aluminum plate sector said facing supply glut

Keywords: Tags  service centers, distribution, aluminum, Suzy Waite, aerospace, automotive, suzy waite

LONDON — Excess capacity is likely to act as a major restraint on the market for 6061 aluminum plate in 2013, according to a number of service centers active in the market.

An expected surge in demand for aerospace-grade plate—2000- and 7000-series alloys—led to significant capacity increases over the past few years, but with demand for the material slower to take off than anticipated, mills have switched production to 6061, sources said.

Right now, there is plenty of 6061 plate inventory in the United States, one service center source told AMM. "It seems that all of the plate mills in the world during the last aerospace cycle doubled their capacity, and I don’t think aerospace demanded it. There is a lot of 6061 plate in the U.S. now, and we’re certainly not expecting any shortage."

Major aerospace mills ramped up production to meet expected demand as airlines started to replace older fleets and respond to an increasing number of air travelers. But inventory hangover from the slump of 2008, coupled with delays in such blue-ribbon programs as Boeing Co.’s 787 Dreamliner and Airbus SAS’ A380, helped temper the expected boom in demand.

In response, mills have turned that excess capacity toward 6000-series alloys, further pressuring a market already struggling to cope with rising imports.

"There’s 6061 showing up in some of the mills’ depots, which indicates there’s a glut of 6061 available," a second service center source said. "It’s not that demand is down. It’s that more qualified producers in the world are all pointing their guns to the U.S. There’s a lot of 6061 out there."

Few expect the aerospace market to provide significant relief in 2013, which in turn is likely to be bad news for the 6061 market.

"It all correlates back to waiting for the boom cycle in the aerospace world to correspond with the boom cycle in automotive, which would place constraints on 6061 as a result," the second service center source said.

"In 2010, we were talking about (the aerospace boom) happening in 2012 or 2013, but right now the threshold point is moving further and further out. We think it won’t happen in 2013, but in 2014. The backlogs are there, but there have been production constraints related to technology," he added.

Even if aerospace does perform better than expected in 2013 and the three largest domestic producers of aerospace alloys—Alcoa Inc., Constellium Inc. and Kaiser Aluminum Corp.—all shift production to 2000- and 7000-series aerospace alloys, imports likely would offset any tightness that could theoretically occur in the 6061 market.

"Eventually there will be a pinch on domestic production of 6061, but there will be plenty of import metal," a third service center source said.

A fourth service center source agreed. "Mills with limited capacity that can make 2000-, 4000-, 6000- and 7000-alloys will always go where the money is. (It’s) capitalism at its best. If 6000-series alloys start to get tight and prices rise, then you can bet (global) mills will increase production," he said. "Santa ... has all the aluminum we could ever want in his bag of goodies."

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