Metal Center News

JAN 2018

Metal Center services the metal center and toll processor industry.

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the highest monthly annual rate since the Great Recession. "I think that the residential mar- ket, the housing market, is continuing to grow, but it's got to be single-family houses that rise," says Lanza. "Single- family home growth drives our prepaint- ed market." Numerous factors, including rising employment and the fact that older mil- lennials are starting to buy homes, bode well for the residential mar- ket. Single-family housing is expected to increase 9 percent in dollars next year, according to Dodge Data & Analytics. While another indicator of fu- ture construction conditions, single-family permits, was up 10 percent year to date through November. "With low unemployment and increasing owner-occupied house- hold formation, single-family starts should continue to make gains in 2018," says Robert Dietz, chief economist at the National Association of Home Builders. That could also mean good news for the nonresidential market, which had a disappointing year in 2017. Along with single-family homes, commercial con- struction is a huge market for prepainted metal. Take metal roofing, for example. Even though it continues to make head- way in the residential retrofit market, the vast majority of metal roofing goes toward nonresidential construction proj- ects. Another prepainted metal product that is heavily used in the nonresidential sector is insulated metal panels. Distrib- utors of these two products would cer- tainly benefit from a healthy commer- cial construction market, and it stands to reason that recovery in this sector would be welcomed by coil coaters and painted metal suppliers alike. Lucky for them, analysts are pre- dicting some growth this year. "We're expecting the construction market to do a bit better in 2018 than it did in 2017." says Plummer. "Our view is that the un- derlying fundamentals, along with where we are in the cycle, would suggest that we've got at least one if not two more decent years for both residential and non- residential construction." Plummer puts that growth somewhere in the low single digits, adding that steel and aluminum use in the entire construction sector should be up approximately 2.5 percent in 2018. That prediction is supported by ana- lysts at Dodge, who expect total U.S. construction starts in 2018 to climb to $765 billion. "There are several posi- tive factors which suggest that the con- struction expansion has further room to proceed," says Robert Murray, chief economist at Dodge Data & Analytics. "Overall, the year 2018 is likely to show some construction project types register gains, while other project types settle back, with the end result being a 3 per- cent increase for total construction starts. By major sector, gains are predicted for residential building (up 4 percent) and nonresidential building (up 2 percent)." The remaining prepaint market in- cludes a variety of automotive and con- sumer and commercial products appli- cations, such as appliance, HVAC and lighting products. Behind construction, transportation accounts for 15 percent of the prepaint market, consumer and com- mercial products account for 6 percent, and the remaining 4 percent is a variety of miscellaneous applications, ac- cording to Metal Strategies Inc. Within the transportation market, about 85 percent of prepaint applications fall into the light vehicle category, says Plummer. Unfortunately, light vehicle production throughout the NAFTA region was down 3.9 percent through October. In the U.S., year-to-date production through October was down 8.2 percent. Still, some coil coaters are finding ways to grow their transportation busi- ness by developing new technologies and finding novel ways to apply prepainted metal within the automotive sector. Mate- rial Sciences Corp. has begun laminating multimetals in order to help lightweight vehicles and control acoustical engineer- ing in both the Class 8 truck and North American car markets. "We're bringing multimetals together Entrance accumulator Pretreatment (cleaning and conversion coating) Exit accumulator Curing oven Recoiler Cut-off Water quench Finish oven Top coater Prime coater Uncoiler Prepaint Outlook 24 ❘ Metal Center News — January 2018 www.metalcenternews.com U.S. Prepaint Steel Coil Market 2017 Category Market share Building/Construction 75% Transportation 15% Consumer/Commercial Products 6% Other 4% The prepaint process starts with a metal coil being positioned at the beginning of the coating line, where it is unwound, precleaned, pretreated, preprimed, prepainted and recoiled in one continuous process. (Photo Courtesy National Coil Coaters Association)

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