WHAT'S HOT

By Tom Stundza, Executive Editor -- Purchasing, 2/8/2001

The crystal ball indeed is cloudy for 2001 demand for aluminum mill products. Sales were healthy until mid-2000, when it caught the flu. Mill orders through November were 11% lower than the previous year. Still, because of excess early-year bookings, market inventories through October were 24% higher than in the first 10 months of 1999. Some market insiders suggest inventories will normalize this quarter as orders rebound. They also say supplies actually may tighten because of ingot-smelting curtailments in the Pacific Northwest. My contrarian view is that inventories will take quite some time to be worked off in a slowing manufacturing economy. First, there's plenty of ingot available worldwide to be rolled and extruded into mill products. Second, shipments to the construction and the transportation markets (especially to makers of trucks, trailers and rail cars) are very weak and won't perk up quickly. And these two markets account for 42% of sales of aluminum mill products.