Storm clouds are forming in the North American aluminum market as makers of everything from automobiles to beverage cans to kitchen appliances are holding off booking next year’s raw material orders.

Producers, recyclers and product makers of the metal gathered at a conference in Washington this week to discuss government policy and end markets with a muted mood, especially compared to a year ago when the industry was amid its best stretch in a decade. 

The so-called mating season, when buyers and sellers negotiate terms and conditions for next year’s needs, is extending into the fall later than last year as uncertainty related to inflation, supply chains and economic growth leave buyers hesitant to book more metal than might get consumed, according to conference participants.

Buyers familiar with negotiations raised red flags in June, saying they expected the mating season to begin later. With that concern now confirmed, executives admit demand is weak as customers are opting to work through an overhang of stockpiles instead of booking new deals.

“While we do expect some potential clouds with the possibility of a broader economic slowdown, aluminum remains well-positioned to weather any storm,” said Buddy Stemple, the chief executive of Constellium Rolled Products. 

To be sure, strength in packaging and the beverage can industry as well as strengthening aerospace demand is keeping people optimistic that they’re not looking over a cliff. But a potential slowdown in construction after current projects are finished and the multiple headwinds to automobiles are driving this prolonged negotiating period. 

“It’s become evident that you can’t expect much more than a flat environment best case across the board because you’re even starting to see automotive affordability becoming an issue,” Timna Tanners, an analyst at Wolfe research, said in a phone interview. “Clearly the combination of higher interest rates and recession risk don’t set up for a great aluminum outlook.”

Most insist that while the near-term outlook for the market is weak, they don’t expect contraction in demand. A few warned of a headwind most people haven’t yet considered: surging interest rates, which are almost certain to cause an upheaval in contracts for customers that have been used to near-zero percent interest rates to finance their metal purchases.

The benchmark aluminum price traded in London is down more than 20% so far this year, and has dropped almost 50% from an all-time high hit in March as Russia’s attack on Ukraine threatened supplies. 

Shipping and logistics costs for the metal in the US are down 11% so far this year, raising the possibility that consumers may be willing to hold off doing new contracts in hopes that costs could drop even more.

Alcoa Corp., the largest US aluminum producer, two weeks ago said high energy and raw materials costs and lower aluminum prices are squeezing the company, warning investors that it will result in lower earnings for the third quarter. Century Aluminum Co., the second largest domestic producer, in June announced it would idle one of its US plants and layoff more than 600 employees due to surging energy costs. 

Suddenly hanging in the picture is whether the London Metal Exchange, the world’s largest bourse for industrial metals trading, will ban Russian material. The Aluminum Association, which represents US aluminum companies, said this week such a move would have “predictable effects” on domestic supply, noting that unexpected US sanctions on Russian aluminum in 2018 caused an upheaval for consumers who had to scramble to find replacements.