CHICAGO North American service centers are hoping for better times in the second half of 2013 and into 2014 after June brought another month of shipment declines compared with the same period last year.
Every month for which data is available in 2013 has seen U.S. aluminum shipments lower than in the same month of 2012, according to data from the Metals Service Center Institute (MSCI). June was no exception.
U.S. service centers shipped 121,900 tons of aluminum products last month, down 5.5 percent from 128,900 tons in June 2012, while inventories fell 2.7 percent to 366,900 tons (2.7 months supply at current shipping rates) from 376,900 tons (2.9 months supply) in the same comparison, according to MSCI data released July 17.
Year-to-date shipments of 739,000 tons were down 6.8 percent from 793,100 tons in the half of last year.
Canadian service centers shipped 12,900 tons of aluminum products in June, a decrease of 4.4 percent from a year earlier, while inventories decreased 1.9 percent to 36,000 tons (2.8 months supply). Shipments in the first half of 2013 totaled 79,900 tons, a decline of 4.2 percent from the first half of 2012.
Im awfully glad the second quarter is behind us. While I dont have great expectations for the third quarter, out of the gate Im pleased, said one service center source, noting that activity in July to date for his firm is up compared to the same period in July 2012.
Increased orders are coming in from a range of sectors, including aerospace, marine, and building and construction, the service center source said. But he questioned whether the current uptick in demand was sustainable or a temporary blip.
Forecasts of a strong August, a month that is historically slow, are questionable, he said. Ive written off the second half. Im hoping for a better 2014, he said.
The service center source ticked off a list of problems he said were still dogging the aluminum distribution sector and unlikely to be resolved in the near term: the impact of budget sequestration in the United States, low prices for aluminum on the London Metal Exchange, and mills becoming more aggressive about taking end-user business that has traditionally been handled through distribution channels.
The impacts of sequestration alone have been wide ranging, hurting not only military business but also orders tied to hospitals as well as infrastructure work, the service center source said.
There is just a lot of anxiousness about when public dollars are going to be flowing through the economy, and that has a big ripple effect, he said.
But other service center source centers stressed that their forecasts indicated that 2013 would prove to be at least on par with if not better than 2012, thanks to a strong showing in the second half resulting from expected improvements in the U.S. economy.
A second service center source said comparing 2012 and 2013 isnt useful because each year has different dynamics, with 2012 getting off to a fast start in the first quarter before slowing in the second and then tailing off significantly in the third and fourth quarters.
I think 2013 is going to be different, he said, noting that his firm recorded a poor first quarter of 2013 compared to the year-ago quarter. But by the end of the second quarter, 2013 was a few points better than the same period in 2012, he said.
I still believe that well see 2013 slightly better than 2012 but were just getting there differently, with a strong finish to the year instead of a strong start, he said.