Overview
The aluminum extrusion market is weakening due to the downturn in the transportation and construction markets. The purgeantares of aluminum extrusions in residential building has been declining since 2005. Analysts anticipate a decline in non-residential building to follow and should be evident in retail and restaurants. It's anticipated that hotels, motels, and office buildings may also see a dip in 2008. Many analysts do not see any immediate relief in sight. However, the commercial building and certain transportation market sectors along with other diverse markets have sustained a healthy market demand for aluminum extruded products used in many various applications.
The U.S. aluminum industry annually produces approximately $40 billion in products and exports. Aluminum is one of the few products and industries left in America that truly impacts every community in the country, either through physical plants and facilities, recycling, heavy industry, or consumption of consumer goods. In terms of both its positive economic and environmental impact, the aluminum industry remains one of our most significant national and international success stories. In 2006, global production of primary aluminum increased 3.8%; however, U.S. production fell 7.25% during the same time period. China leads the world in production and consumption.
The North American aluminum supply is comprised of three sources: Primary (domestic production from ore material); Imports (of primary and secondary ingot and mill products); and Recycled (metal recovered from scrap). Historically, aluminum has proven to be one of the most important materials in successful recycling programs. Aluminum offers high scrap value, widespread consumer acceptance, and aluminum recycling enjoys significant industry support. Just under 50% of the aluminum used in North America in 2005 came from domestically produced primary aluminum while about 30% was derived from recycled materials. The remainder is imported. The price outlook for primary aluminum is for prices to continue their rise through 2010.
Top markets for the industry are transportation, beverage cans and other packaging, and building construction. The transportation industry as a whole is the largest output market for aluminum in North America, using 33.9% of aluminum produced worldwide in 2005. In 2006, aluminum overtook iron to become the second most used material in new cars and trucks worldwide. Containers and packaging is the second major industry consumer at 20%. Products such as beverage cans, food containers, and household and institutional foils make up this segment. Building and construction made up the third largest at 14.4% in 2005 with products in the residential, industrial, commercial, farm, and highway sectors.
Aluminum extrusion is a segment of the aluminum market and is the material of choice for countless applications. Designers and materials specifiers choose aluminum profiles because extrusion offers so many design advantages: various alloys can be readily formed into complex shapes; extrusion tooling is inexpensive; lead times for custom shapes or prototypes are relatively brief; many different finishes are available; and the life-cycle value of the product remains high due to aluminum's recyclability.
Industry Condition – Fair
Key Industry Indicators
New Equipment Demand
- Extrusion presses
- Billet furnaces
- Log shears
- Hot saws
- Sawing systems
- Quench systems
- Pullers
- Handling systems
- Stretchers
- Cut-off saws
- Stacking systems
Overview
The used equipment market for aluminum extrusion equipment has been depressed in recent years and the condition is characterized by many market participants as being fair at best. Since there have been no significant sales of aluminum extrusion equipment, there is no way to gauge specific trends in the value of used equipment. But, given the general economic climate, the downturn in both the transportation and construction industries and rising aluminum prices, these market indicators suggest the industry is at substantial risk of reduced demand and increased pricing pressures. This has the potential of causing business failures and substantially increasing the supply of used equipment on the market.
Over the past 12-24 months, the market for used extrusion lines has been steady, with both new and used machinery dealers reporting an increase in inquiries about equipment. There were several transactions last year. There are buyers currently in the market for 2,500- to 3,800-ton capacity extrusion lines, but demand has diminished for lines with capacities lower than 2,500-tons. It is possible that smaller lines would be sold for the value of their component parts.
Factors influencing value and marketability of aluminum extrusion lines include tonnage, billet size, age, and condition, and desirability of the related downstream equipment. Because this machinery is installation intensive, the first objective should be to find a purgeantaresr for the equipment that would buy it to operate in-place, benefiting from all installation and leasehold improvements.
Used Equipment Values –Fair
- Supply of used equipment – Decreasing
- Demand for used equipment – Stable
Liquidation Monitor
- Major sale events
- No recent liquidations; many companies either absorb equipment or scrap equipment to replace less productive systems or keep off the market and away from competitors.
Valuation Monitor
AccuVal routinely provides appraisal, consulting, and asset management services to all segments of the
Metals industry including
Aluminum Extrusion.
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Representative Clients Our Associates Have Served
Success Stories
- Provided Valuations Supporting the Successful Funding of Some of the Largest Aluminum Extruders
- Aided in a Dispute Resolution Between Lessor and Lessee of Two Major Extrusion Lines
- Valued a Major Aluminum Smelter in Conjunction with the Dissolution of a Partnership Agreement
- View all Success Stories
Kaiser Aluminum & Chemical Corporation
Indalex Aluminum Solutions
Kawneer Company, Inc.
Magnode Corporation
National Southwire Aluminum Co.