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Spot aluminium plate prices under pressure, Kaiser says
Edited by : AL CIRCLE
2 min read
New capacity, import pressure and inventory overhang could push spot prices for aluminium plate downwards, according to Kaiser Aluminum Corp chairman, president and ceo Jack Hockema.
The California-based aluminium company is seeing “intensifying short-term competitive pressure” on spot prices, which is expected to cause “price erosion” for both aerospace plate and general engineering plate in 2014, Hockema said in an earnings conference call with analysts on Friday October 18.
Spot business represents a “significant” portion – though less than half – of Kaiser’s plate sales and has an impact on the company, he said, but declined to put a number on the spot pressure, which he characterised as a “moving target”.
“[We expect] some pretty significant pressure on spot prices for plate for next year,” Hockema said. “We are already seeing it on business in the first quarter of next year.”
The spot pressure on aluminium plate prices comes as an inventory overhang in aerospace plate continues to affect that market and could do so until well into 2015, Hockema said.
In addition, Kaiser continues to see import pressure from Western Europe and South Africa, as well as from other plate producers who are seeking qualification to supply the aerospace market, he said, counting Aleris International’s new hot rolling mill in China among those competitors.
“There is capacity coming on stream of non-qualified aerospace suppliers [so] there will be some of that product in the marketplace,” Hockema said pointing to the Aleris operations in China.
Also weighing on third-quarter results was an inventory overhang in non-aerospace plate products, Hockema said, noting that he had “misfired” in previous predictions that it might be worked off sooner.
“At this stage we are less inclined to anticipate significant improvement in early 2014,” he said.
Other headwinds for Kaiser included construction at its Trentwood facility in Spokane, Washington, and extended maintenance at its facility in Newark, Ohio.
Work at Trentwood should be largely completed by mid-2014, Hockema said, but Newark will see a planned outage at its large extrusion press.
The California-based aluminium company is seeing “intensifying short-term competitive pressure” on spot prices, which is expected to cause “price erosion” for both aerospace plate and general engineering plate in 2014, Hockema said in an earnings conference call with analysts on Friday October 18.
Spot business represents a “significant” portion – though less than half – of Kaiser’s plate sales and has an impact on the company, he said, but declined to put a number on the spot pressure, which he characterised as a “moving target”.
“[We expect] some pretty significant pressure on spot prices for plate for next year,” Hockema said. “We are already seeing it on business in the first quarter of next year.”
The spot pressure on aluminium plate prices comes as an inventory overhang in aerospace plate continues to affect that market and could do so until well into 2015, Hockema said.
In addition, Kaiser continues to see import pressure from Western Europe and South Africa, as well as from other plate producers who are seeking qualification to supply the aerospace market, he said, counting Aleris International’s new hot rolling mill in China among those competitors.
“There is capacity coming on stream of non-qualified aerospace suppliers [so] there will be some of that product in the marketplace,” Hockema said pointing to the Aleris operations in China.
Also weighing on third-quarter results was an inventory overhang in non-aerospace plate products, Hockema said, noting that he had “misfired” in previous predictions that it might be worked off sooner.
“At this stage we are less inclined to anticipate significant improvement in early 2014,” he said.
Other headwinds for Kaiser included construction at its Trentwood facility in Spokane, Washington, and extended maintenance at its facility in Newark, Ohio.
Work at Trentwood should be largely completed by mid-2014, Hockema said, but Newark will see a planned outage at its large extrusion press.
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