It ain't over yet. That's what aerospace
metal producers have been saying as the past two years'
frenetic growth cools down a bit in the first half of 2007.
"The only problem, if you will, is a
short-term one-too much inventory in the system," said Tom
MacDonald, global product manager of nickel-based alloys at
Bohler-Uddeholm Corp., Rolling Meadows, Ill., a subsidiary of
Austria's Bohler-Uddeholm AG. "But that's being worked
MacDonald believes that some people have
already worked off their excess stocks, while others will have
done so by the end of the second quarter and the remainder
should be in balance by late in the third quarter.
MacDonald answers an emphatic "no" when asked
if the bloom is off the aerospace rose, estimating that the
market is likely to improve by 5 to 8 percent annually over the
next three or four years. He noted that his parent company is
installing more melting, forging and finishing capacity in
Austria and new rolling capacity in Brazil. Bohler-Uddeholm's
main aerospace customer for its nickel alloys and premium
remelted steels is the jet engine industry, although it also
sells to the power generation and oil and gas markets.
Marty Losch, vice president of North American
sales for Haynes International Inc., Kokomo, Ind., said that
market projections by Boeing Co., Chicago, and France's Airbus
SAS indicate there's still plenty of growth left in aerospace.
"Bottom line is, if you look at the projections there's no
reason to believe we've passed the peak," said Losch, whose
aerospace business is focused on superalloys mainly for jet
Edward F. Sobota Sr., chief executive officer
of Tech Spec Inc., which makes titanium long products in Derry,
Pa., said the big question is "Can everyone's increased
production come online to meet the increased demand we're going
to face, probably toward the end of the year?"
The first part of the year has been marked by
"a tremendous amount of quoting" but few solid commitments from
customers. But rather than interpreting this lull as a sign
that the surge in demand during the past two years has peaked,
Sobota believes it merely reflects some "overbuying" whose
impact will dissipate when a number of aerospace and energy
programs approach full production.
"It's clear we're going to be in an upturn
that's going to continue a bit longer," said John Ball,
president and chief executive officer of Universal Alloy Corp.
The Canton, Ga.,-based subsidiary of Switzerland's Alu Menziken
Aerospace boasts that, along with Pittsburgh-based Alcoa Inc.,
it accounts for 80 percent of the global market for structural
aluminum aircraft extrusions.
After breakneck growth the past year or two,
market activity is up slightly in North America and Asia this
year and has leveled off in Europe, probably due to delays on
the Airbus A380, Ball said. Universal Alloy has taken the
opportunity to start converting presses from direct to indirect
operation, which typically results in more efficient production
requiring less tonnage and superior metal flow. A newly
installed heavy press also is indirect.
One issue for extruders and other aluminum
metal buyers this year is feedstock costs. While Universal
Alloy had earlier hedged material, Ball pointed out that few
people expected it to move up by another $300 to $500 a tonne
this year on the London Metal Exchange.