U.S. metal imports slow in Feb, Q2 recovery seen - Reuters

Monday, 18 April 2011 00:00
Mother Nature's wrath likely had a hand in slowing U.S. imports of aluminum and copper in February, but if seasonal demand trends hold true, shipments should recover in the months ahead.

Data from the U.S. International Trade Commission on Tuesday showed copper imports fell for a third straight month in February to 50,494 tonnes.
The February figure brought the two-month total to 107,892 tonnes, down more than 11 percent from 121,626 tonnes in the corresponding period of 2010.
Inbound shipments of aluminum slowed to 103,891 tonnes in February, bringing total imports for the first two months of the year to 210,083 tonnes, over 17 percent below the 254,281 tonnes reported last year.
Record-setting snowfall totals across much of the country caused many end-users and manufacturers to either cancel or delay bookings of material in January and February.

But as metal-intensive industries like construction and automotive head into the seasonally stronger second quarter, import levels should respond accordingly, analysts said.
"Demand signals from the U.S. for base metals are pretty positive and heading in the right direction," said Nicholas Snowdon, an analyst with Barclays Capital in New York.
"As auto plants pick up, it's likely to have a positive effect on the level of inventory OEMs (original equipment manufacturers) and automakers will have going forward."

Total U.S. automotive inventories stood at 2,484,300 as of April 1, representing 54 days of supply, down from 60 days as of March 1, according to the Automotive News Data Center and company sources.
As lean as they are, U.S. automotive inventories are expected to see further reductions due to production slowdowns and parts shortages from quake-ravaged Japan.
Toyota Motor Corp warned that the uncertain supply of parts from Japan could threaten its output of vehicles through July.
Last week, the Philippine unit of Honda Motor Co Ltd said it would cut production by 50 percent due to a spare-parts shortage.

Sterling Smith, an analyst with Country Hedging Inc in Minnesota, believes Japan's supply chain troubles would likely translate into greater U.S. auto sales, and with it, stronger aluminum demand.
"If you have a person who is not brand-loyal and wants their car, that's going to leave them with domestic opportunities, which would mean more domestic use of aluminum and use by automakers who are not having any parts issues," he said.
"It could be bullish for aluminum, and I think it could be bullish for a company like Ford."

The U.S. auto industry snapped a four-year sales decline in 2010, including three consecutive sales months above the 12 million-unit annual rate to close the year. Most analysts expect double-digit growth in 2011 and further gains in 2012.
Barclay's Snowdon agreed, saying he saw few reasons to think the auto sector would experience a significant softening in 2011.
"Given that the construction sector remains very soft, we have heard nothing to believe that the transport sector is going to be anything but a positive influence on metals demand this year."