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Prepaint outlook's a gray area: while a sound economy and hurricane rebuilding hold promise for prepainted coil sales, excess supply and excessive competition threaten to tarnish 2006.

Article Excerpt
AFTER EXPERIENCING a roller-coaster year in 2005, North American coil coaters are hoping for a better 2006, now that inventories are more in line with demand. Much depends on how much prepainted metal is imported, however, and if there is any additional consolidation or rationalization of capacity in this generally oversupplied marketplace.

"Overall demand has been good, about the same as a year ago," says Richard F. Klein, president of Metal Coaters LP, Houston. "The early part of the year was down, but it has come back. Some was due to increased inventories, some to imports, some to sluggishness in construction products. But business started to pick up in late summer."

Demand for coated coils was down about 7 percent, on a square footage basis, in the first half of 2005 vs. the first half of 2004, with prepainted steel showing more weakness than aluminum, says John Mitchell, president of the National Coil Coaters Association and manager of marketing and business development for Nichols Aluminum, Lincolnshire, Ill. He notes however, that 2004 was an exceptionally good year, up 20 percent from 2003.

Looking forward, most observers are cautiously optimistic about 2006, especially if the rebuilding of the hurricane-ravaged Gulf Coast takes off in the first quarter, when the market usually sees seasonal weakness, says James Lockey, senior director of sales and marketing for Centria Coating Services, Pittsburgh. "But the big question will be how much painted steel comes to our shores," he adds.

Though coil coating is a relatively mature market, demand for prepainted steel and aluminum has grown steadily among OEMs because of its cost and environmental advantages, says analyst Christopher Plummer, managing director for Metal Strategies Inc., West Chester, Pa. A properly designed coil coating line can apply a high-quality finish on a large amount of metal in a very short time without releasing harmful compounds into the atmosphere. "It is easier to paint metal in a controlled environment," Plummer says, noting that for an end-user to benefit...

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