CHICAGO Service center sources are divided over whether recent data that showed declines in U.S. aluminum shipments and inventories last month indicate tough times ahead.
Some market sources argued that they had yet to see optimistic talk translate into increased orders as customers continue hand-to-mouth buying patterns, while others said they have seen a significant uptick in both orders and inquiries for the May-June timeframe and expect a strong finish to the year and an even stronger 2014.
One service center source said his company had seen orders for most products dip in 2013 compared with last year. In plate, for example, the trend has hit shipments to the aerospace, defense and general fabrication industries on a combination of economic uncertainty, a supply glut, reduced government spending, customer wariness to restock amid falling prices, and a general lack of business activity, he said.
Of aluminum products tracked by the Metals Service Center Institute (MSCI) in the United States (amm.com, May 15), only rod and bar showed an improvement in April compared with the same month last year.
"Customers are still very cautious and buying only what they need," the service center source said. "There is less business to be had, and people are aggressively pursuing it, so pricing is under extreme pressure. ... There is no one person to blame. Were all to blame."
A second service center source said Aprils shipment numbers dont give him much optimism for the rest of 2013. "Ive got a small handful of customers who say they are as busy as they have ever been. But theyre the minority," he said.
On the pricing front, "its a disaster," he said. "Some people need to move metal and are doing it at crazy prices," he said, speculating that they might be under pressure to meet either internal company targets or those set by their lenders. "I wish I had a good explanation. But I hope it turns around quickly."
But a third service center source strongly disagreed with downbeat assessments of the market. "We are seeing a significant amount of activity. And people are looking to buy metal through 2014 and out five years," he said. "Like everyone else, we did not anticipate the year that were having. But its getting better."
He also predicted a "boomer of a year" in 2014, citing strong demand from customers in the aerospace sector, some of whom are buying metal now that wont be "bolted on" to planes or helicopters until the first or second quarter of next year.
He blamed poor sentiment on misguided forecasts at the beginning of the year. The entire supply chain "geared up" to meet demand that is materializing later than expected, he said. While that material might not be being used up at the pace or in the months expected, "no one is walking away from these new planes, chemical plants and pharmaceutical facilities."