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Article Excerpt
While purveyors of aluminum in North America are hoping the market has finally turned the corner, structural changes in the economy--most notably the "export" of manufacturing to China and other low-cost countries could result in a less resilient recovery than would typically follow such a deep industry recession.
Following a "pretty lousy" start to 2003, Lloyd O'Carroll believes business is turning around. While service centers, OEMs and mills are all talking about a pickup to some degree, "we won't see the double-digit snapback that we've seen after other recessions, partly because the economic recovery is a lot weaker than normal, and we will not get the same level of inventory restocking," says O'Carroll, vice president and chief economist for BB&T Capital Markets, Richmond, Va.
"Demand has been spotty this year," says Chuck Adams, market director for transportation and industrial products at Pechiney Rolled Products, Ravenswood, W.Va. "The year started out pretty well, but with the Iraqi war and all of the issues that brought with it, business slowed in the second quarter. There is a lot inventory in the system attributed to that."
U.S. aluminum shipments fell about 1 percent in the first half of this year, compared with the first half of 2002, O'Carroll says. July's data showed a sharp rebound, however, jumping 12 percent, followed by strength in August and September. While this is encouraging, he warns, it is too early to tell if this war the result of inventory building or early signs of sustained demand growth.
"Inventory restocking is a critical issue in our view," he adds. "From what we can tell, the supply chain is...
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