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Show . I Aluminum Outlook Is Bright Despite a somewhat uncertain uncer-tain economic outlook this year, it is generally expected that the aluminum industry will make further excellent progress, aided by exceptionally excep-tionally strong demand, a higher price level, and large order backlogs. NOT ONLY is there heavy demand from such major customers as aerospace and aviation (including both commercial com-mercial and light aircraft), packaging, and transportation transporta-tion (particularly in the automotive au-tomotive field where the use of aluminum is rapidly increasing) but also from the aluminum industry itself which is apparently facing a shortage of aluminum products for its own use. As a result, both Aluminum Company of America and Reynolds are reopening some of their closed facilities in order to improve the availability of primary aluminum and aluminum sheet and plate products. THE SAME strong areas that are pushing demand for domestic aluminum are expected ex-pected to account for continued con-tinued strength in markets throughout the world. As a matter of fact, growth in aluminum demand worldwide world-wide this year is expected even to exceed that of the U.S. Thus, we look for the major North American producers of aluminum for 1979 as a whole to rack up additional profit gains once again. AT THE close of 1978, the producers' published price for primary ingot was at a range of 55.5 cents to 57.5 cents per pound compared with 53 cents at the beginning of the year representing an increase of some 6.6 percent. So far in 1979 the price has continued to advance. Early this month, certain companies were charging 60-61 cents per pound, and chances are it will go even ' higher.'" " ; - ALUMINUM SHEET is in especially tight supply, so the price for this product is considerably con-siderably steeper than for ingot. in-got. For example, Aluminum Company of America, taking advantage of the strong demand for sheet used to make beverage cans (this product accounts for as much as 15 percent of Alcoa's total shipments), will soon raise the price of this item from a present level of 76.5 to 80.7 cents a pound. Into the 1980s the demand for aluminum should continue to grow. According to the chairman of Aluminum Company Com-pany of America, supply and demand for the world aluminum industry should remain "in balance" through the early 1980s, and domestic shipments are expected to average about four percent in annual growth during that period. EVENTUALLY, OF course, the continued expansion of demand will catch up with supply, and thus there will be periods of tightness. The low rate at which U.S. rolling capacity is being added may compound the problem still further. Most ol the outstanding outstand-ing firms, however, are widening their fabricating facilities to some extent, particularly par-ticularly in the area of rolling capacity, in order to meet demand. Additionally, Alcoa, bowing to increasingly strong domestic domes-tic markets for aluminum ingot, in-got, recently announced plans to reopen part of its Point Comfort, Tex., aluminum smelter in May. But the major leaders within the in- dustry are not planning extensive ex-tensive capacity additions because they have been "burned" in the past when thev have taken such action. THE FOUR leading aluminum producers in North America are Alcan Aluminum Ltd., Aluminum Company of America, Kaiser Aluminum and Chemical Corp., and Reynolds Metals. This quartet of manufacturing manufactur-ing firms accounts for an estimated es-timated 41 percent of the total primary capacity in the free world. , Last year they all fared well, with profits in each instance ins-tance running well above the levels of the prior year. DURING 1979, we anticipate an-ticipate that these four leaders Alcan, Alcoa, ; Kaiser and Reynolds will er-make further powerful gains owing to strong demand and higher prices. Thus, we ad- vise retention of the stocks of these attractive aluminum producers for further progress. |