The Wall Street Journal, CNN and many other news outlets are reporting today that GM plans to idle most of its plants this summer for two months.  This announcement follows yesterday’s notification that GM will skip its June 1st debt payment of $1B.  The automaker continues to be burdened with excessive inventories; 113 day supply of  cars and 123 day inventory of trucks.

Sadly the impact to the Automotive Supply base will be deep and hurtful. As more and more Auto Suppliers seek bankruptcy protection daily- this is surely bad news for those suppliers already on their heels.  Surely all participants in the supply chain will want to review their raw & finished good inventories now- then monitor going forward. As suppliers act to minimize their risk, be aware that ABC Metals is here to assist.  Call ABC Metals regarding inventory conversion and lower your exposure to market pressures. See also http://online.wsj.com/article/SB124041946006244177.html

For years anyone who slits, tins, forms, stamps, shapes, or otherwise processes flat-rolled product have struggled at times with flatness issues.  I have found a nice online article about Flatness and Leveling @ http://www.thefabricator.com/CoilProcessing/CoilProcessing_Article.cfm?ID=436. The source is trade magazine “The Fabricator’  a industry source I have subscribed to for years. I believe you will find this article a solid, clearly written source of information regarding the struggle we all fight with flatness issues.

Please note ABC Metals can roller level and/or tension level flat rolled product ‘In-House’ with short lead times available. Tension leveling is our preferred solution to most flatness requirements. For more information please contact us at 800-238-8470 or on the web @ www.abcmetals.com

Since we broke out of the $1.40-$1.60/lb COMEX trading range we have seen Copper brush $2.20/lb. Published comments regarding, ‘Why?’ point to a seasonal spring rally, improved sentiment and results in the financial sector, and Chinese policy practices of hedging their dollar portfolio by commodity conversion.  Lastly, rumors of Chinese restocking of strategic reserves has fueled the current spike in the metals market.

In spite of the current Copper uptick, there is concern here at ABC that prior (weeks old) dismal commodity price forecasts remain hard to dismiss. We likely will see these current prices fizzle by late summer. Still, the new average price will be higher as the Global Economy improves.

Aluminum prices are depressed. While Carbon Steel, Stainless, and Aluminum scrap prices remain low and flat.

Weds April 15th AMM (American Metal Markets) featured an article disclosing that a growing number of copper and brass servicenters are pulling in their credit terms as they fight to survive. One Servicenter Executive commented, “We’re having to tell more and more people they’re on COD–it’s not worth selling if you’re not going to get paid.”

Although some servicenters are trying to work with their customers; taking them to court remains an option. Court is always a last resort, but with the demise of Guardian Metals and the closure of AJ Oster’s Allentown, PA facility, it is apparent; cash is king and key to survival.

The article continues, ” …many red metal distributors are returning to square one and denying credit from the get-go if they catch even a whiff of default.” With a GM Bankruptcy becoming more likely and Delphi’s credit arrangement expiring in June; the supply base is increasingly vulnerable and prone to failure.

My advice: Protect your current term arrangements with your suppliers. First- Pay on time and in full. Second-If you must be tardy- communicate! They will likely work with you to manage through these tough times.  Third-Convert old/obsolete raw material inventory into cash. The copper scrap market is up 43% from Feb EOM. Turn your inventory and get the cash. Lastly- only order material that you can turn quickly- flip your inventory in 1 week or less- don’t stock- you may pay more but your cash flow will be much lower.

It has been a week now since I heard the sad news that Guardian Metal Sales had closed and is proceeding through the liquidation process. Guardian Metal was founded in 1939 and had ownership transfer only once in its history.  When I check www.guardianmetal.com I do not see any news or  updates. However, I have spoken to several former employees and customers who are negotiating with the Receivor to get any stranded materials released to them or their customers.

In the meantime, ABC Metals is in a unique position to serve the former customers of Guardian Metal Sales. Our geographic footprint matches Guardian Metal well; and our current inventory position means most customer can get their orders filled in 1 week of less. Contact us with your material needs 800-238-8470