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Strategies & Market Trends : Commodities - The Coming Bull Market -- Ignore unavailable to you. Want to Upgrade?

To: craig crawford who wrote (200)	6/12/2001 2:28:20 AM
From: craig crawford	Read Replies (2) \| Respond to of 1643

Aluminum firms see sporadic effect of West power outages California's downstream aluminum facilities and secondary aluminum smelters are seeing sporadic effects from the power outages in the area, but all facilities surveyed by Platts were able to make customer shipments by using inventory on hand. All said demand is down so much (by as much as 50% since last year in some parts of the extrusion segment) that they had enough material available to make shipments. The outages are part of a "voluntary energy saving program," or interruptible service plan, that many companies signed up for as much as eight years ago in exchange for an approximate 15% discount in power prices. Depending on their contracts, power companies are allowed to block power for a certain number of times per year. Some metals sources said that figure is as much as 50-80 times. Slow demand helps to make shipments The fact that extrusion demand has been off 30-50% during these outages "has been a silver lining in a very ugly cloud," said one extrusion source. However, another official with a Southern California extruder said inventory control has been crucial, and planning ahead has helped, "but lead times are just about gone, and we're definitely afraid" of the impact to inventory levels of continued production stoppages. Aluminum rolling mill Commonwealth Industries CEO Mark V Kaminski said in a statement that the company is concerned about its four facilities in California, where operations have faced mandatory shutdowns for as much as 18 hours/day. "It is impossible at this time to predict the impact of this crisis on our first-quarter net income," he said. California secondary aluminum smelters said they also have had power outages and have had to cease alloy production. The electricity is used to run the electronic controls of the furnaces, while natural gas heats the furnaces, so the metal is able to continue to remain heated. One smelter official said only half of his facility is under the interruptible service plan. He said he has had to send shifts home and has canceled other shifts, but he said extensive inventory build-up due to a lack of demand in the market has prevented any delays in customer shipments. In total, he lost 40 hours of production, or about a couple hundred tonnes. "In my 30 years in this business, I have never seen anything like this."