Planning for Aluminum Prices and Lead Times in 2022

Managing inventory of aluminum extrusions and raw materials will be key to keeping aerospace projects on time and within budget in 2022. Efficient management will be crucial as aluminum prices remain high and supply chains are still tight.

“Things have been very unstable and trends forecast they will continue on that route. We haven’t gotten back to normal,” said Jamie Barron, Vice President of New Source Corporation.

Within the last year, the Midwest average price of aluminum has risen from just over $1 per pound to $1.84 per pound, according to aluminum prices from Platts Metals Week. Such a meteoric increase can cause havoc for manufacturers that need thousands of pounds of parts.

Manufacturers also have to wait longer for materials. Parts that once took 12 to 14 weeks now take 32 to 36 weeks.

Facing challenging market conditions

Further challenges could be ahead as economic conditions shift globally. The London Mercantile Exchange cash aluminum price hit an all-time high of $3,495 per metric ton on March 1, the highest price since July 2008, largely because bullish power prices and persistent supply chain issues are reducing the amount of available metal, S&P Global Platts reported. Increasing demand in the U.S. and reduced production in China have contributed as well.

Geopolitical tensions are sending aluminum prices even higher, according to Ag Metal Miner. International sanctions against Russia, which is the world’s second-largest aluminum producer, for its invasion of Ukraine is already could stymying trade and already tight supply.

“There doesn’t seem to be any stabilization at all. This trend is continuing with no end in sight. Now with all the current geopolitical events and added sanctions, we area ll closely monitoring the Market to be as proactive as possible,” Barron said of the rising price of aluminum.

Avoiding problems with vendor-managed inventory services

Challenges have not been confined to the prices and supplies of aluminum. Alloys and other raw materials needed for aerospace parts have been affected as well. Even if one material is available, a part can’t be made if another is missing.

For example, mills are allocating stainless steel because they cannot fill every order for every customer and certain speciality alloys, such as some nickel alloys, have their order book closed for the remainder of 2022. “That’s how tight the capacity in the market is now,” Barron said.

New Source Corporation helps our customers avoid delays by keeping a large inventory on hand. New Source Corporation’s vendor-managed inventory services help customers get the right parts at the right time. Customers overcome supply chain issues such as price increases and supply constraints as well.

New Source Corporation consistently orders parts sooner so that we stock enough inventory for customers. We now refill our inventory at 60% of need instead of 40% to allow enough time for parts to arrive. “We’re proactively looking at items to make sure we are re-ordering our parts at the right time,” Barron said.

Barron suggests customers work eight months ahead if possible. “Partnering with a distributor like us that makes the investment to stock parts at the right time allows you to have some stability, even though lead teams keep going out,” he said.

Working with the right distributor and planning ahead can help you keep your projects on time and within budget even if pricing and supply challenges continue in 2022.

Do you still have questions about vendor-managed inventory? Contact us today! New Source Corporation will be happy to assist you in finding the product that fits your needs.

Please note all metal prices, lead times, and other external factors fluctuate on a constant basis. All information was deemed accurate to the best of our knowledge at the time of this post.


March 2, 2022

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