CHICAGO Aleris International Inc. has high hopes for the
rest of 2013 thanks to recent expansions, a strong outlook for
the automotive and aerospace sectors, and a pick-up in North
American building activity.
The aluminum company sold approximately 140 tonnes of plate
from its new rolling mill in Zhenjiang, China, in the first
quarter, generating approximately $1 million in revenue,
executive vice president and chief financial officer Sean Stack
said in a conference call May 9.
The facility, expected to have hot metal capacity of 250,000
tonnes per year, will be able to produce 35,000 tonnes of
value-added commercial plate in its first phase, chairman and
chief executive officer Steven J. Demetriou said. Initial
production will be aimed at the engineering, transportation and
shipbuilding sectors, he said. The mill will continue to ramp
up production of commercial heat-treat and non-heat treat plate
throughout 2013 to fulfill orders in Asia, Europe and North
America, he said.
Meanwhile, the plant has begun the qualification process with
several major global aerospace customers and is expected to
start selling aircraft plate by the second half of 2014,
While backlogs at major aircraft producers remain at
record levels, the aerospace supply chain is
dealing with a bit of an inventory overhang in the
short term, Demetriou conceded. But he stressed that growth
fundamentals for rolled products, at 6 percent per year through
2016, remain robust.
Given that expected demand growth, the Cleveland-based company
is approaching its current capacity limits in Europe and will
therefore be constrained in its abilities to grow at the same
rate as the aerospace sector in the second half of 2013,
Demetriou said. That situation should be alleviated when the
Zhenjiang rolling mill is selling aerospace-qualified material,
likely by the second half of 2014, he estimated.
On the automotive front, light-vehicle build rates are expected
to grow by 3 percent in North America in 2013 even as they slip
by the same amount in Europe, Demetriou said. But tougher
government-mandated fuel economy standards should boost
aluminum demand in the sector overall, a trend which should
benefit the companys expansion of wide auto-body sheet
capacity in Belgium (amm.com, March 14), he said.
And on the building front, steady gains in North American
housing construction should be good for Aleris, which Demetriou
characterized as one of the largest suppliers of sheet to the
building and construction sector. We have the capacity to
grow with further recovery, he said.