service centers last month recorded their strongest aluminum
shipments since May last year, boosting expectations for 2014
even as some market sources questioned the sustainability of
the demand uptick.
Improved activity was
reported in markets as diverse as aerospace, automotive and
commercial construction and in products ranging from extrusions
to sheet and plate and bar and tube.
"If you would have
asked me four months ago, I would have said I was disappointed
with 2013. ... But its turning out to be the opposite of
2012," one service center source said. Demand in 2012 was
strong at the beginning of the year but slowed in the second
half, while 2013 has seen the trend reverse, he said, echoing
the sentiment of others.
centers aluminum shipments totaled 135,800 tons in
October, up 11.6 percent from 121,700 tons the previous month
and 8.7 percent ahead of 125,000 tons a year earlier, according
to the latest Metals Service Center Institute data. Despite
those gains, year-to-date shipments of nearly 1.26 million tons
were down 2.2 percent from 1.29 million tons in the first 10
months of last year.
368,900 tonnes (2.7 months supply at current shipping
rates) at the end of October, up 1.7 percent from 362,700 tons
(3.0 months supply) the previous month but down 0.8
percent from 371,800 tonnes (3.0 months supply) a year
centers shipped 14,100 tons of aluminum products in October, up
13.7 percent from 12,400 tons the previous month and 0.5
percent higher than 14,000 tons a year earlier, but
year-to-date shipments of 131,500 tons were down 3 percent from
135,500 tons in the same period last year. Canadian inventories
were pegged at 34,500 tons (2.5 months supply) at the end
of October, down 1.4 percent from 35,000 tons (2.8 months
supply) a month earlier and 12.8 percent below 39,600 tons (2.8
months supply) a year ago.
The service center
source said his company has seen shipments rise due to demand
from an improving commercial construction market, especially in
the southern United States. He chalked up the improvement to
increased bank lending allowing long-deferred projects to move
for 2014. ... This is sustainable as long as Congress
doesnt create another budgetary crisis," he said. While
he predicted continued strong demand, he warned that metal
prices could erode further, given high warehouse stocks.
A second service
center source said his company saw improved demand in October
due to a flurry of activity from government-related business
that was largely unaffected by the short government shutdown
because much of it was mission critical. "No one is going to
drive an unsafe tank," he said.
He said his company
also was seeing improved demand from the aerospace sector due
to increasing build rates and record backlogs at commercial
aircraft manufacturers. He did not dispute mill comments about
an inventory overhang dragging into 2015 (
amm.com, Oct. 9), but he said his company
generally supplies productssuch as aluminum plate and
tubingto fabricators who then pass the material further
downstream. "No one takes something from us and puts it into a
cockpit. It might go into a system that raises and lowers a
landing gear. But it goes through four or five hands first and
might take six to 18 months," he said.
A third service center
source said his company had recorded a "solid" October for
extrusions as well as rod and bar. He said it was unclear what
exactly was driving demand but speculated that increased
aluminum use in the automotive sector might be helping.
"Youve got 8- and 9-speed transmissions now. Thats
a lot of parts, and it can add up to pounds quickly," he
But he was unsure
whether overall demand was growing or whether his company was
gaining business at the expense of competitors by being more
aggressive. If the latter is the case, he questioned whether
shipments would continue to improve in a U.S. economy still
dogged by political brinkmanship and economic uncertainty.