Copying and distributing are prohibited without permission of the publisher
Email a friend
  • To include more than one recipient, please separate each email address with a semi-colon ';', to a maximum of 5

Billet premiums to slide into 2014: Lawlor

Keywords: Tags  Sapa, Sapa AS North America, Patrick Lawlor, joint venture, Norsk Hydro, Orka, billet, billet premium contract negoations

CHICAGO — Sapa AS North America sees opportunities in the automotive and building construction markets, but expects billet premiums to slide going into 2014 contract negotiations.

Billet premiums "increased substantially last year," but the market has "flattened out" this year as capacity was added, Patrick Lawlor, president of the North American wing of Oslo, Norway-based extruder Sapa AS said in an interview with AMM.

"We expect a bit of softening in billet premiums going into contract negotiations looking at next year," he said. "The extrusion market is down 1.5 percent this year, which is a bit unlike the situation going into the last contract negotiation season. And with more capacity coming onboard, we feel generally that there should be a downward pressure on billet premiums.

AMM’s billet premium is currently at a range of 10.75 to 12.25 cents per pound.

Lawlor declined to say where he thought billet premiums might be in 2014. "No idea. But they’ll be lower," he said.

But while Sapa sees billet premiums sliding, the company is bullish on its prospects in North America thanks to a rebounding construction market and increased use of aluminum in cars and trucks to meet stricter fuel economy standards, Lawlor said. "We see automotive as a major, high-potential growth market for us, and we have been quite successful in the last two years in gaining contracts," he said.

For example, the next generation of the Ford F-150 is expected to enter production in 2014 with aluminum extrusions in such applications as roof rails and running boards, Lawlor said. "There is a lot more aluminum on that vehicle than there has been in the past, including extrusions," he said.

Sapa AS, a joint venture between Norsk Hydro ASA’s extruded products unit and Orkla ASA subsidiary Sapa Group that was established Sept. 1 (, Sept. 3), should also allow the company to gain a larger footprint in the Americas. The company has 20 plants in the United States, three in Canada and one each in Brazil and Argentina. That will give Sapa’s North American operations about 70 extrusion presses, which combined will be able to offer diameters from 3 inches to 21 inches, as well as sophisticated machining capability for fabrication, he said.

The combined company will also have five anodizing lines, 10 paint lines and nine casthouses in the Americas, Lawlor said. It is expected to have 23,000 employees and $8.5 billion in annual revenue worldwide, with 6,500 workers and $2.5 billion of that revenue coming from the Americas, he said.

Sapa’s owners also see opportunities in the Americas and will support future investments, Lawlor said. "There could be a few selective acquisitions either in a geographic segment where we don’t have a plant today or a product niche we don’t have capabilities in," he said, although he added that Sapa doesn’t currently foresee any "major acquisitions."

Sapa has already invested $35 million in a new press dedicated to rod and bar for the distribution market at its Cressona, Pa., facility (, April 18, 2012), which pushed its first billet within the past two weeks, Lawlor said. Sapa also has a new press in Brazil at what was formerly a Norsk Hydro site, he said.

There could be some limited changes to commercial operations as a result of the two organizations coming together, although Sapa generally will look to use its bigger sales force to bring in more business and better serve customers, Lawlor said. "If there are any redundancies on the commercial side, it will be few and it will be swift," he said.

On the operational side, Sapa expects to continue to feed its casthouses in the Americas with scrap generated internally or by its customers as it looks to reduce its outside scrap requirements, Lawlor said. "We still buy a large volume externally, but a much higher volume comes from our internal casthouses," he said.

In addition, Sapa expects to focus on its North American technical center as it looks to develop alloys, find new customers and markets for extrusions and compete with steel and plastic in a variety of products. "Our market offerings really start with the needs of the customers, and we deal with all kinds of customers, from the very large, global guys ... all the way down to the customer who buys 10,000 pounds of metal a year," he said.

Have your say
  • All comments are subject to editorial review.
    All fields are compulsory.

Latest Pricing Trends