CHICAGO A decline in aluminum shipments has dented North American service centers confidence for the second half of the year despite bullish predictions about the markets long-term strength.
"Its not a crisis time in the industry. But there is very little tangible information that you can point to that would allow you to feel good in the short term," one service center source said. "I think weve hit the bottom of the market. The question now is when are we going to bounce back?"
Shipments fell in both the United States and Canada during August, according to the latest Metals Service Center Institute (MSCI) data. That followed gains in July that had some market players predicting a strong finish to 2013 (amm.com, Aug. 15).
U.S. service centers aluminum product shipments totaled 133,100 tons for the month, down 0.8 percent from 134,100 tons a year earlier, and inventories fell 4.1 percent to 365,000 tons (2.7 months supply) from 380,700 tons (2.8 months supply) in the same comparison. Shipments of just over 1 million tons through August were 4.6 percent below the nearly 1.05 million tons shipped in the first eight months of last year.
Canadian service centers shipped 12,700 tons of aluminum products in August, down 5.1 percent from some 13,400 tons a year earlier, while inventories tumbled 8.6 percent to 35,800 tons (2.8 months supply) from 39,200 tons (2.9 months supply). Shipments for the first eight months of the year totaled 105,000 tons, down 3.9 percent from 109,200 tons in the same period last year.
Positives for the aluminum industry, in theory, include improving construction data and widely expected future strength in the automotive sector, according to market sources.
Demand for aluminum auto body sheet, a potential "game changer" for the aluminum industry, was estimated at around 200 million pounds in 2012, but could surge to some 1 billion pounds in 2014 and double to 2 billion pounds by 2020, Davenport & Co. LLC analysts Lloyd T. OCarroll and John F. Ockerman said in a research note Sept. 16.
"We see this as the most important, transformative trend for the aluminum industry on a medium- and long-term basis since the introduction of the aluminum can," they wrote.
The service center source didnt disagree with the assessment, but questioned when the predictions might translate into more orders. "Those kinds of positives are clearly keeping the market going. But theyre not enough to give it any real buoyancy," he said.