CHICAGO Demand for soft alloy extrusions is showing
signs of easing, a potentially worrying trend for the second
half of 2013, according to Service Center Metals LLCs top
When the Institute for Supply Managements Purchasing
Managers Index (PMI) fell to 49 percent in May (amm.com,
June 3), it brought back uncomfortable comparisons to June
2009, R. Scott Kelley, president and chief executive officer of
the Prince George, Va.-based company, said in an interview with
At the same time, three of the last five months have seen soft
alloy extrusion demand down year over year, he said.
You dont want to read too much into any one month,
but May certainly was a disappointment, Kelley said.
From 2006 to 2009, demand dropped every month year over year
for three years in a row, he said. In 2010, that trend
reversed, with demand improving every month year over year as
businesses crawled back out of the recession,
But December 2012 shipments were worse than those in December
2011, and the same was true for February 2013 vs. February 2012
and March 2013 vs. March 2012, Kelley said.
Things have flattened out, no question about it, he
said. Business is still relatively good. Its just
that there are definitely some clouds on the horizon that we
are very cognizant of.
SCM has heard a lot from some customers and other
industry players about a potential surge in business activity
in the second half of 2013 that could see the last six months
of this year stronger than the second half of the last two
years, Kelley said.
But based on what? he asked. Certainly, the
trends dont look like were moving that way, and
Im usually very optimistic.
If 2013 is to experience the 5-percent to 10-percent growth
seen over the last two years, the second half would have to see
enough demand not only to offset a slower-than-expected first
half but also to compensate for the traditionally slow months
of July and December, Kelley reasoned.
So far this year, rod and bar shipments are down almost 4
percent, tube and pipe shipments are off 2.7 percent and
extruded products in general are down 1.1 percent, he said.
Distribution, which is heavily dependent on bar and rod
shipments, is off by 12 percent, Kelley said.
Certainly things arent deteriorating at an alarming
level, but I dont see things trending in the right
direction, he said. Still, who knows? Maybe (trends
will improve) next month.
The building and construction sector accounted for the majority
of soft alloy extrusion demand until 2011, when it was
overtaken by a transportation sector primarily driven by
automotive demand, he noted.