The aerospace market is still
flying high on the back of skyrocketing backlogs and build
rates for commercial airliners, which are expected to keep
growing by leaps and bounds, but the overall growth rate seen
in recent years is expected to taper off as defense projects
Olivier Jarrault, executive vice
president and group president of engineered products and
solutions at Pittsburgh-based aluminum producer Alcoa Inc.,
said he is very excited about where the market is going in both
the short and long term, and what strong backlogs--8,500
commercial aircraft--mean to the industrys metal
We really believe that the
global aerospace market is a clear winner and will be a winner
for years to come, he said during a recent aerospace and
defense industry conference. Given the need to replenish aging
and less-fuel-efficient aircraft, Jarrault said airframe
manufacturers will have to build about 34,000 commercial planes
over the next 20 years, or about 1,700 per year.
Chicago-based aerospace giant
Boeing Co. said in a recent market outlook report that about 68
percent of the total will be single-aisle planes, reflecting
growth in such emerging markets as China and the continued
expansion of low-cost carriers globally. But the company said
the addition of 7,950 twin-aisle airplanes, allowing airlines
to continue to expand into international markets, means the
twin-aisle segment will expand to account for a 23-percent
share of fleets vs. 19 percent currently.
Boeing also expects the global
economy to grow by an average of 3.2 percent per year over the
next 20 years, which will translate into approximately
5-percent annual growth in both passenger and cargo
In response to market
pressures, airlines are deploying capacity more strategically
to help boost yields and cover higher fuel expenses,
Boeing said, noting that airlines are optimizing airplane
utilization more closely to seasonal demand fluctuations, while
passenger loads remain near historic highs. The number of
new-generation airplanes in the parked fleet remains low,
indicating that airlines are shifting utilization to their most
efficient assets, which is expected to help the global
airline industry achieve a profitable year despite
below-average economic growth and oil prices that are likely to
average in the triple digits.
Commercial aircraft deliveries
last year were up a record 29 percent from 2011. The only
question is when the spigot will be turned off, said
Richard Aboulafia, vice president of Teal Group, Fairfax,
Analyst Lloyd OCarroll,
senior vice president of research for Richmond, Va.-based
Davenport & Co. LLC, said in Davenports first-quarter
aluminum outlook that both Boeing and France-based Airbus SAS
continue to receive orders at a rapid clip, especially for
Boeings 737 MAX and Airbus A320 NEO aircraft.
A key risk to rising
delivery schedules is whether deliveries during the transition
period, as new single-aisle models are introduced, will dip as
airlines defer deliveries of the legacy models, he said.
However, he and several other industry observers predict that
commercial aircraft deliveries will continue to rise through
the end of the decade.
According to online information
service Airline Monitor, aircraft deliveries are expected to
increase 12 percent to 1,450 planes this year from 1,295 in
2012, and rise another 7.2 percent to 1,555 planes in 2014.
This moderation in growth is not unexpected, Aboulafia said.
We have never before seen 29-percent year-on-year growth,
and we will probably never see it again.
And in a trend that favors
greater metal content per plane, OCarroll said a shift is
occurring toward the new aircraft mix. We expect
(wide-body aircraft) to grow 10 percent per year from 2012 to
2017, he said. Meanwhile, narrow bodies are
expected to grow only 3 percent per year.
Another trend has been the
application of next-generation engine technology, as well as
slight airframe modifications to improve aerodynamics and
weight, to current aircraft programs, said Ingrid Jrg,
senior vice president of global markets at Beechwood,
Ohio-based Aleris International Inc.
For example, the 737 MAX and the
A320 NEO, while not undergoing major airframe redesigns, are
receiving more-efficient, hotter-burning engines that use more
titanium and nickel-based superalloys, according to Dan
Greenfield, vice president of investor relations at Allegheny
Technologies Inc., Pittsburgh.
More titanium also is being used
in some newer airframe models because it tends to be more
compatible with the carbon fiber composites that have seen
increased use in new planes, and the landing gears on bigger
planes are largely titanium, said Jeff Wise, vice president of
sales and marketing at Titanium Industries Inc., Rockaway, N.J.
Nevertheless, while titanium companies continue to perform
well, they have seen an 8- to 10-percent year-on-year decrease
in consumption, although Wise said there could be some
improvement as Boeing ramps up 787 Dreamliner build rates.
But even though some
next-generation aircraft could possibly use more alternative
materials, including carbon fiber composites, with airframe
manufacturers looking for any way to save it seems as if
aluminum will continue to be the material of choice, said Bob
Mraz, vice president of sales and marketing at ONeal
Steel Inc. subsidiary TW Metals Inc., Exton, Pa.
That kind of thinking was
questioned when Boeing first announced its 787 Dreamliner,
which is about 50 percent composite materials. But the rocky
road to getting the 787 in the air, including several years of
delays as well as high-profile problems with the
aircrafts lithium-ion batteries, might highlight the risk
of using new technologies and new materials, Aboulafia
Bill Sales, senior vice
president for nonferrous operations at Reliance Steel &
Aluminum Co., Los Angeles, said that while he doesnt
think Boeing is giving up on composite materials, its various
issues could change the companys thinking about their use
in the future, especially for single-aisle planes. Aboulafia
agreed, noting that Boeing and Airbus are now focusing on
lower-risk projects and lowering development costs.
Jrg said that
re-engineered aircraft will predominantly use aluminum in their
primary components, except in the empennage; however, composite
materials might be considered in larger airplanes outer
wing box. Also, future fuselage applications could be based on
advanced or even low-density aluminum alloys, particularly for
2000- and 7000-series alloys have been selected for various
aircraft programs since they offer improved structural
performance in terms of strength and damage tolerance without
significant cost increase, she said, while new-generation
low-density alloys, including aluminum-lithium and
aluminum-magnesium-scandium, offer improved properties along
with advanced, cost-efficient manufacturing methods. They
may offer a step-change in aircraft design and are extremely
competitive against composite-based solutions, in particular
for fuselage applications.
All eyes are currently on what
materials will be used in Boeings 777X, which is expected
to go into production in 2018-19. While no decision has been
made yet, Aboulafia said that it likely will have an aluminum
body with composite wings.
Jarrault said that even
composite-intensive aircraft contain a lot of aluminum.
Our content on the Boeing 787 is 80-percent higher than
on the legacy Boeing 767 aircraft that it is replacing and is
three times the aluminum content on the Boeing 737, he
OCarroll said in
Davenports recent aluminum aerospace plate report that he
expects to see major growth in the heat-treated aluminum plate
market over the next several years, reaching 742 million pounds
in 2017, up 48 percent from 500 million pounds in 2012, with
most of that growth coming in 2013 and 2014. He predicted that
overall aluminum shipments to the aerospace market will
increase 9.6 percent to 731 million pounds this year and
another 8.2 percent to 791 million pounds in 2014.
But despite optimism for the
commercial airline sector, it is a very different story for
defense aircraft, which is facing significant downward
budgetary pressure and was already hurting before the
Sequestration is just the
tip of the iceberg, said Dan Stohr, spokesman for
Arlington, Va.-based trade association Aerospace Industries
Association of America, who called it a long-term issue.
According to Aboulafia, three
jet programs--the F-15, F-16 and C-17--have been kept alive
thanks only to exports, the F-22 program is dead and it is
uncertain whether the FA-18 can continue as U.S. demand for
that plane is winding down. Right now, the F-35 Joint
Strike Fighter is the only game in town, he said.
Mraz said fighter jet programs
likely will be under extreme scrutiny with the sequestration
cuts. They will continue to build planes, but not at the
volumes originally forecast, he said, although that is
There is just a lot of
uncertainty about what the effect of the sequestration will be,
and it will continue to be so until they actually start kicking
in, Greenfield said.
Also uncertain: how much of the
cuts will be in aircraft investment vs. personnel. Should they
be in personnel, the already-strong unmanned drone business
could get even stronger, Sales said. The nation needs the
same level of security even with fewer feet on the
But overall, the next two years
look to be solid for aircraft and aircraft metal demand,
Aboulafia said. There are relatively few short-term
risks. However, the massive increase we saw last year will not