Declining Orders to Cause Operating Rates at Aluminum Processors to Fall in July

SMM anticipates another decline in operating rates at aluminum plate/sheet, strip and foil producers for July due to sliding order volumes. 

 

Unlike aluminum extrusion producers, most aluminum plate/sheet, strip and foil producers keep rolling machines running through holidays. SMM research reveals that operating rates at aluminum extrusion producers and at aluminum plate/sheet, strip and foil producers follow a similar trend line. Aluminum plate/sheet, strip and foil producers reported YoY growth in operating rates in 2010 and the first half of 2011. This growth then reversed into negative territory from the second half of 2011 as the real economy weakened. Producers did not see appreciable improvement in their order books until H2, 2012. The turnaround led operating rates into positive YoY growth territory again in Q2, 2013. 

 

Soaring demand for beverages due to rising temperatures in July, however, is boosting demand for aluminum used in beverage cans. Some beverage can manufacturers say supply cannot keep up with their demand, but aluminum demand from the housing, automobile and machinery sectors are all down due to hot weather. 

 

Many aluminum foil producers saw higher-than-expected YoY growth in air-conditioner foil orders during H1, 2013, which allowed most producers to keep operating rates high at over 70%. Nevertheless, air-conditioner foil consumption began to fall sharply during the summer low-demand period.