Story ID: 
Strong Aircraft Orders Seen Driving Aluminum Demand
By: Bill Carey
Caption: The flurry of new airliner orders in the first half of 2011, coupled with rising demand from other industries, has proved to be a boon to aluminum supplier
Word Count: 409
The flurry of new airliner orders in the first half of 2011, coupled with rising demand from other industries, has proved to be a boon to aluminum suppliers like Alcoa, which more than doubled its second quarter earnings in results announced on July 11. But subsequent stock market reaction, which saw Alcoa stock fall the next day, revealed how volatile the commodities sector can be.
Analysts interpreted a recent dip in aluminum prices as indicative that a period of high demand might be coming to an end. Alcoa doesn’t think so.
“Although the economic recovery is uneven, the overall outlook for Alcoa–and for aluminum–remains positive,” commented Klaus Kleinfeld, chairman and CEO of the U.S. group. “Demand for aluminum continues to rise and so does growth in our major markets. These factors support our projection that aluminum demand will grow 12 percent this year and will double by 2020.”
In the aerospace sector alone, Alcoa predicts 7-percent growth in demand for aluminum. At June’s Paris Air Show, Alcoa announced the award of a new multi-year supply agreement with Airbus for aluminum sheet and plate products using advanced-generation aluminum alloys. Valued at $1 billion over its life, the agreement covers a range of Airbus narrow- and widebody aircraft. Alcoa flat-rolled aluminum products will be supplied from plants in the U.S., Russia and the UK.
Also in Paris, Alcoa and former Boeing unit Spirit AeroSystems exhibited a “revolutionary” fuselage panel to demonstrate the potential of aluminum-based products that the companies claimed are lighter, less costly and less risky to produce than composites. The panel was produced using Alcoa’s Al-Li 2060, a third-generation, aluminum-lithium alloy. Spirit AeroSystems then stretch-formed the panel on existing production tooling into the final, curved shape needed for the fuselage. Alcoa said the project demonstrated the compatibility of advanced aluminum alloys with the existing manufacturing supply chain, and their ability to deliver the strength, damage tolerance and corrosion resistance of metallics at lighter weight.
“This new combination of performance attributes and aircraft operating costs available with advanced metallic solutions stands in contrast to earlier assessments that drove some airframers to increased use of composites,” Alcoa declared.
The company said it has launched a number of new aerospace solutions, including new proprietary alloys and advanced structural technologies, that will lower the weight, cost and maintenance of new aircraft compared to composites.