Companies strive to keep up with changing aluminum prices
Demand could drive costs up in 2007
Cash prices for aluminum experienced major fluctuations in 2006, with the lowest price of $2,271 per ton recorded on Jan. 1 and the highest price of $3,275, a 44 percent increase, recorded on May 11. On Nov. 30, cash price closed out at $2,685 per ton, 18.2 percent higher than Jan. 1.
While frequent price changes are normal for the metal—a common material used for curtain-wall and window systems—glass company officials say paying close attention to movements and forecasts is critical.
“Price fluctuations have been part of doing business forever, not just in 2006,” says Tim McQuade, president of Northwestern Industries Inc. in Seattle. “There are enough indicators flowing through our industry to warn of these fluctuations. Paying attention to these indicators and planning accordingly will lessen the effect they have on profitability.”
John D’Amario, director of sales for Architectural Glass & Aluminum Co., a contract glazing company in Oakland that manufacturers its own wall systems, agrees. “It's important for us to continuously monitor the price of aluminum week by week,” he says.
D’Amario says one way his company saves is by gauging whether to buy a surplus of the material rather than buying later at a price that could be higher.
While attention to these fluctuations can lessen some costs, managers should brace themselves for a continued increase in aluminum prices, says Mike Petersen, president of Petersen Aluminum in Chicago.
“I expect prices to stay fairly high for foreseeable future, because metal is in short supply,” Petersen says. “There is a deficit product compared to demand, and that will remain the case unless the United States goes into recession. I don’t see that happening.”
If prices become unmanageable for some companies, Petersen says managers could consider using steel for some projects. “I recommend to glass contractors that they consider other Kynar [paint] coated products over aluminum. Kynar coated steel is a lower cost option for fabricated flat glass,” Petersen says. “But, I don’t know that there’s any great alternative.”
Read how glaziers protect themselves against unexpected changes in aluminum prices in an article from the June 28 edition of e-glass weekly.