AMU Survey: Tightening aluminum market not met by inventory rebuilding

Nearly half of the May AMU survey respondents said lead times were extending, while an equal share described them as stable. A small minority noted shrinking lead times. It’s a shift from April, when fewer than one-quarter reported extending lead times, while more than three-quarters described conditions as stable.

The May reading rebounded closer to February and March’s readings, following a sharp contraction from March to April.

The qualitative lead time question captures views from respondents across the aluminum supply chain, including recyclers and scrap processors, distributors and traders, manufacturers and assemblers, producers, and logistics participants.

Respondent commentary frequently tied tighter conditions to logistical disruptions, transportation costs, and geopolitical uncertainty rather than an uptick in end-market demand, while measured lead time results varied by broader product type (sheet, extrusion, primary).

At the same time, inventory responses remained relatively conservative. A total of 59% of respondents noted “keeping steady” regarding inventory management strategy, with around 23% and 18% responding “drawing down” and “building” respectively.

The disconnect between inventory management and a greater share of “extending” qualitative lead times suggests that respondents may perceive tighter market conditions while remaining cautious about committing additional capital to inventory.

The broader qualitative tightening sentiment also became more pronounced once scrap recycler and processors responses were separated from the wider respondent base. Recyclers generally reported stronger obsolete scrap availability and somewhat steadier conditions than downstream manufacturers and assemblers, which expressed greater concern around supply adequacy and physical tightness.

Measured lead times

Measured lead time averages only partially confirmed the broader tightening sentiment reported across the supply chain.

The distinction between qualitative lead times and measured lead times, which tracks a narrower group of respondents providing booking windows for specific semi-fabricated and primary aluminum products, became increasingly important in May.

Sheet products continued showing firmer conditions in May and rose across all subcategories: common alloy sheet, auto body sheet, and can sheet.

On average, sheet product lead times rose by roughly half a week to 8 weeks in May from April, driven by week-long increases in auto body and can sheet lead times and a quarter-week uptick in common alloy sheet, which remained the longest lead time category among measured products.

Common alloy sheet averaged around eight-and-a-half weeks in May, while auto body sheet came in roughly half a week below that figure.

While US common alloy sheet production is spread across a relatively broad group of rolling mills, many facilities produce comparatively modest tonnage volumes alongside other rolled products, which can leave lead times sensitive to shifts in scheduling and product mix.

Extrusion and primary aluminum lead times were mostly lower in May compared to April.

Lead times for 6063 mill finished extrusions dipped by a week to six weeks, while 6061 mill finished extrusion lead times were stable at seven weeks.

Though the both alloys are used in similar end markets, 6061 applications tend to carry greater exposure to aerospace, industrial and infrastructure-related demand, while 6063 demand is more closely tied to architectural and commercial construction activity, where recent indicators such as ABI readings have remained comparatively weak.

Meanwhile, primary billet lead times averaged 5.5 weeks, a month-to-month decline of more than a week, while P1020 or high-purity ingot averaged an even steeper drop to 6.5 weeks in May.

As noted earlier, the measured lead time averages represent a narrower tier of buyers booking specific semi-fabricated and primary aluminum products, while the broader qualitative responses capture overall market perception that may incorporate freight pressure and procurement uncertainty.

Even as the supply perceptions and lead time indicators diverged, the responses still pointed to tightening physical conditions that have not been accompanies by broader restocking activity.

Current vs. forward demand

More than two-thirds of respondents said current demand for their products or services was improving, while smaller shares described demand as stable or declining. The “improving” share increased sharply from April and marked the strongest reading in the survey’s historical data.

Yet less than half of respondents said US demand would improve over the next month, while a larger share expected either stable or declining conditions in their “part of the aluminum market” next month. In fairness, 47% of respondents anticipated “improving conditions next month, the second highest reading in the survey’s history, but this marked a 13-basis-point drop from an all-time high in April.

Interestingly, the share of respondents that noted improved export demand surged to 50% of the respondent pull, 20 basis points higher than the second-largest reading a year ago. An 8% share of respondents reported declining export demand, the smallest share in the history of the survey, with the remaining share was comprised of “stable” replies.

On its surface, the May export demand reading appeared notably strong, but the underlying respondent mix depicted a more uneven picture. Scrap recyclers and processor responses accounted for nearly all of the survey’s “improving” export demand responses, while manufacturer and assembler, distributor and trader, and producer responses were more mixed.

Supply concerns

Respondents grew cautious again regarding whether new US primary and semi-fabricated aluminum supply was keeping pace with demand. A larger share of respondents said new US supply was not keeping up with demand compared to April, partially reversing a shrinking share of responses in April from March.

That said, the May reading remained less skewed toward concerns around domestic supply adequacy than the February or March results, when the share of respondents saying supply was not keeping up with demand reached its highest levels in the survey’s history.

Tangentially, no respondents said imported primary or semi-fabricated aluminum was becoming less competitive in May. A larger share reported imports becoming more competitive, although 70% still noted “no change” and the “more competitive” share remained near the midpoint of the survey’s eleven-month history.

Even though “more competitive” was not the majority response, the shift occurred alongside unanimous responses for increasing freight costs and the highest share of respondents reporting increasing container costs in the survey’s history. No respondents reported declining container costs, while April and March posted the third- and second-highest share, respectively.

Putting it together

Rolled product lead times strengthened, qualitative lead-time extension sentiment rebounded sharply, freight and container cost pressures accelerated significantly and more respondents questioned whether domestic primary and semi-fabricated supply was keeping pace with demand.

That said, inventories remained mostly steady, extrusion and primary lead times softened and forward-looking demand expectations eased from April’s peak levels.

The import and export competitiveness results were difficult to isolate into a single directional signal. That said, scrap recyclers and processors overwhelmingly noting the export market was becoming more competitive may be the result elevated London Metal Exchange aluminum and copper prices.

For some shredded scrap grades, international importers unofficially based their buying calculations based on the content contained price of scrap for grades such as zorba and twitch. The alternative is mostly to sell into the secondary smelting market, which is largely driven by automotive demand.

At the same time, increased import competitiveness may not necessarily indicate cheaper import offers outright. Domestic buyers may be responding to tighter availability and having to increase bids as a result, particularly as Gulf-region supply disruptions continue affecting portions of the primary and value-added aluminum market.

Import and export competitiveness questions likely captured different portions of the aluminum supply chain as import activity is more closely tied to primary and semi-fabricated aluminum products, while export activity appeared more heavily associated with scrap flows among survey respondents.

Overall, the results suggested current demand was not resilient enough to drive broad inventory rebuilding, even as respondents increasingly highlighted procurement concerns and logistical constraints.