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US economic woes will be resolved: Noranda

Keywords: Tags  Noranda, aluminum, U.S. economy, Kip Smith, Andrea Hotter

CORONADO, Calif. — The U.S. economy is in recovery mode, and while customers are rightly cautious, the issues facing the country are not new and will be resolved, according to Noranda Aluminum Holding Corp. chief executive officer Kip Smith.

"We have a very serious set of issues that have been with us before—we’ve had a debt ceiling in the past—and they’re going to have to get resolved," Smith said. "I believe it will get resolved; it’s just a question of what period of time and the mechanism, and that’s what creates the uncertainty."

Integrated producers such as Noranda can do a number of things to help weather the economic uncertainty, such as focusing on cash, preserving liquidity and taking care of customer relationships, he said.

Certain sectors have already returned to their pre-downturn rates of growth, Smith said.

Sales to the building and construction industry, which accounts for around one-third of Noranda’s upstream sales, have improved year on year for the first time since before the recession, he said.

On the downstream side, Noranda’s biggest market is the consumer durables sector, which accounts for about 42 percent of its flat-rolled product sales. Aluminum demand from this market remains stable, Smith said, with 2.9-percent growth recorded last year, 1-percent growth forecast for this year and 3.1-percent growth expected in 2014.

Containers and packaging also are seeing stable demand, with foil consumption forecast to grow 2.4 percent this year and 2 percent in 2014.

The electrical sector, meanwhile, is seeing continued growth at a sustainable pace, Smith noted, although the sector’s 13.7-percent growth in aluminum consumption last year will fall to a steadier 3.3 percent this year and 1.8 percent next year.

Transportation is the fastest-growing market overall, with aluminum consumption growth of 14.8 percent last year and 6.7-percent growth expected this year and 9.5 percent next year, Smith said.

"Global aluminum demand is expected to continue to grow as global economic growth improves and higher standards of living and increased demand from emerging markets continues," he said.

The Franklin, Tenn.-based company produces 286 million pounds of extrusion billet, 160 million pounds of rod and 410 million pounds of light-gauge sheet and foil products annually. It sells virtually all of its products to U.S. markets, with a very small amount sold to customers in Mexico.

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