centers aluminum shipments were on a split path in
September, with political brinkmanship in Washington and
worries about a potential U.S. debt default further clouding
the market, according to sources.
"I hate to sound like
Malcolm X, but the chickens will come home to roost," one
service center source said. "We dont need to be
manufacturing a crisis just as were finally getting over
a major financial shock."
Despite an aerospace
sector glut, the service center source said his company has
seen strong growth in plate due to general engineering demand.
Extrusion and cold-finished markets have been "holding their
own" while sheet has seen "less slippage" than in previous
years, he said.
centers aluminum shipments totaled 121,700 tons in
September, up 8.2 percent from 112,500 tons a year earlier,
representing the strongest year-on-year shipment gains to date,
according to the latest Metals Service Center Institute (MSCI)
data. However, the tally was down 8 percent from August.
Inventories fell 3.7
percent to 362,700 tons (3 months supply) in September
from 376,600 tons (3.3 months supply) a year earlier and
were also slightly below Augusts 365,000 tons.
Shipments for the
first nine months of the year, at roughly 1.12 million tons,
were still 3.4 percent below the first nine months of last
centers shipped 12,400 tons of aluminum products in September,
up 1.1 percent from 12,300 tons a year earlier but down
slightly from 12,700 tons in August. Inventories dropped 11.1
percent to 35,000 tons (2.8 months supply) from 39,400
tons (2.9 months supply) in September 2012. Canadian
shipments for the first nine months of the year totaled 117,400
tons, down 3.4 percent from 121,500 tons in the same period
The service center
source also worried that consumer spending could take a hit
from chronic uncertainty resulting from political turmoil in
the United States, as well as the direct and indirect impact of
U.S. government furloughs combined with still-high unemployment
well still be able to have a constructive result. ... But
what Washington does really could collapse the world economy,"
"The problem is even
if you get the government going again, who feels confident that
we are going to have long-term agreement on anything? I
certainly dont," according to a second service center
source, whose company is more directly focused on government
business, including military contracts. "You can say its
Washington to be politically correct. But ... its like
they dont understand whats at stake."
His business has taken
"a real punch to the gut" from a combination of sequestration
and the current budget crisis, he said.
While most Defense
Department employees havent been furloughed, other
government employees, contractors or subcontractors have been
impacted, the second service center source said. That means
that orders requiring inspection before shipment arent
being shipped and are instead backing up on the floor, he
"That not only affects
our billings but our trucking, our contract carriers ... And
the dominoes just keep getting knocked over," he said.
"Its not just government orders. There is a whole line of
other parties that are impacted by this."
Even outside of government business, service centers are
trading among themselves instead of building inventories
because of the uncertain outlook, he said.