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Aluminum shipments off but outlook brighter

Keywords: Tags  MSCI, aluminum, shipments, inventories, service centers, automotive, aerospace, construction Michael Cowden

CHICAGO — Aluminum product shipments by North American distributors tumbled in December, but service center sources dismissed the fall as a typical year-end slowdown in business activity and predicted better times for 2013.

U.S. service centers shipped 91,900 tons of aluminum products in December, down 15.8 percent from 109,100 tons the previous month and off 15.9 percent from December 2011, according to Metals Service Center Institute (MSCI) data, and full-year shipments of 1.49 million tons were down 0.9 percent from the previous year.

Service centers’ inventories inched up to 365,600 tons (4.0 months’ supply at current shipping rates) from 365,300 tons (3.3 months’ supply) in November.

Canadian distributors shipped 8,500 tons of aluminum products last month, down 35.1 percent from 13,100 tons in November and off 12.1 percent from a year earlier, but inventories fell to 38,800 tons (4.5 months’ supply) in December from 39,300 tons (3.0 months’ supply) in November. Full-year shipments of 157,100 tons were up 7.3 percent from 2011.

Market sources expressed optimism about 2013, contending that the decline in shipments was a result primarily of traditional seasonality and year-end holidays cutting into the number of business days.

"We lost pretty much that whole last week (of December), which drives the numbers down. But I think overall we got what we expected to see," a service center source said. "In January, we didn’t see the ramp up we expected in the first week. But since then, things have picked up and every day I am getting a little bit more encouraged. ... I think we’re going to have a good year."

He said his optimism is a result in particular of stronger-than-expected demand in the automotive and aerospace sectors. He noted that every year since 2009 has been slightly better than the year before and 2013 was likely to follow that same pattern, although he cautioned that the year was unlikely to break any records.

Another service center source said his company also was optimistic about 2013, brushing off the December figures to seasonality. "Things have not exploded in January the way I wanted them to. But we’re busy. There is demand because people just don’t have metal on the floor," he said.

The second service center source said he didn’t see any one sector driving the pickup in demand, but instead was across the board. "The only thing that can screw this up is politics. We’re seeing and hearing good things from our customers," he said.

Even a source in the construction sector, which has been slow to recover since the financial crisis, said his firm was "cautiously optimistic" about 2013.

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