• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 18 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 3 days Cheaper prices due to renewables - forget it
  • 3 days e-cars not selling
  • 4 days If hydrogen is the answer, you're asking the wrong question
  • 4 days How Far Have We Really Gotten With Alternative Energy
  • 4 days CHINA Economy Disaster - Employee Shortages, Retirement Age, Birth Rate & Ageing Population
ChAI

ChAI

ChAI is a market intelligence solution that uses Artificial Intelligence on 1000s of data points everyday to provide accurate commodity price forecasts, enabling companies to…

More Info

Premium Content

Aluminium Demand Gets Boost From Backlog In Aircraft Production

  • Boeing and Airbus along with their extensive supply chains, rely heavily on aluminum as a vital material for aircraft manufacturing.
  • Over the past year, aerospace executives have consistently voiced concerns about ongoing challenges in securing raw materials.
  • The aerospace industry appears poised to be a source of significant growth in aluminum demand in the years ahead.

2023 has been a year of waiting and uncertainty for many industrial metal markets, with aluminum being no exception. The global economy has been cast in the shadow of high interest rates, and the eagerly anticipated resurgence of demand from China, especially within its property sector, has yet to materialize. Consequently, prices for base metals have drifted sideways for extended periods throughout the year.  However, in the midst of this cautious market environment, one industry stands out as an outlier in terms of robust demand for aluminum: aerospace manufacturing.

Making up for Lost Time

Few industries bore the brunt of the COVID-19 pandemic as severely as airlines and aerospace companies. From the giants of the aerospace world to the smallest suppliers, nearly everyone felt the impact of drastic production cuts during the public health crisis and the resulting shortages in raw materials. The collapse of global air travel demand, prompted by lockdowns, also led to a significant slowdown in new aircraft production.

Nevertheless, air traffic has made a remarkable resurgence, reaching 97% of pre-pandemic levels globally, and domestic air travel in the United States has even surpassed 2019 levels by 9%, according to the International Air Transport Association. In the time since the world has emerged from the pandemic, demand for air travel has outpaced the pace of production, resulting in a substantial backlog of orders for new aircraft. Aerospace companies are now grappling with the twin challenges of meeting this surging demand while recovering from the pandemic-induced supply chain disruptions and implementing measures to prevent such disruptions in the future.

Scramble for Suppliers

The responsibility for the majority of aircraft production at the OEM level rests on the shoulders of two companies: Boeing and Airbus. These industry giants, along with their extensive supply chains, rely heavily on aluminum as a vital material for aircraft manufacturing. Approximately 25% of global aluminum production finds its ultimate purpose in the transportation sector, with aerospace manufacturers constituting a significant portion of that demand. At a more granular level, aluminum is used in as much as 80% to 90% of the components required to manufacture an aircraft. This underscores the pivotal role aluminum plays in the aerospace industry. With sanctions against Russia, a significant aluminum producer, sourcing this crucial material has become increasingly challenging. Titanium, another essential material for aerospace, has also grown scarce due to sanctions imposed on Russia.

Over the past year, aerospace executives have consistently voiced concerns about ongoing challenges in securing raw materials. In May, the CEO of Airbus cautioned that the supply chain crisis affecting the global aerospace industry could extend into the following year, as reported by the Financial Times. More recently, Rolls-Royce announced plans to cut 2,500 jobs to reduce costs. A key engine manufacturing partner to the aerospace industry, the move by Rolls-Royce highlights that even large companies within the industry are still dealing with the financial fallout of recent years. Sourcing essential parts during periods of scarcity can lead to compromises and corners being cut, as exemplified by the unfolding story of Jose Zamora, AOG Technics, and the parts-supply scandal that has sent shockwaves through the industry.

According to Argus Media, "the overall order backlog continues to swell, standing at 13,547 aircraft mid-year, up by 7.5% compared with mid-2022." While the combined deliveries by Boeing and Airbus this year are approaching the 1,000 mark, there is clearly surplus appetite for new jets from airlines as their financial recovetr continues. In an industrial landscape marked by uncertainty and stalling sectors, the aerospace industry appears poised to be a source of significant growth in aluminum demand in the years ahead.

By ChAI Predict

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News