Carpenter aerospace demand set to rise as 737 MAX cap increases

Carpenter Technology

Carpenter aerospace demand is poised to rise after the FAA lifted Boeing’s 737 MAX production cap. The higher build rate strengthens Carpenter aerospace demand across key jet engine and structural alloy grades. As a result, Carpenter aerospace demand should underpin a multi-year earnings and investment cycle for the specialty alloy producer.

737 MAX ramp unlocks stronger Carpenter aerospace demand

The FAA’s decision to raise the 737 MAX cap from 38 to 42 aircraft per month is a clear upside signal. Carpenter’s chief executive Tony Thene said the change is “a very significant positive” as customers move quickly to increase orders. Higher narrowbody build rates translate directly into more demand for nickel and titanium-rich alloys used in engines and critical structures.

Aerospace and defense already dominate the company’s revenue mix and will amplify Carpenter aerospace demand further. In the fiscal first quarter, aerospace and defense sales rose 11pc to $388.3mn and accounted for 64pc of total revenue. Bookings in the segment jumped 23pc quarter on quarter, supported by five large long-term agreements that lock in alloy volumes over several years.

Beyond aerospace, energy, industrial and consumer markets also contributed to growth, even as medical and transportation softened. Energy sales rose 8pc year on year to $42.5mn and industrial and consumer revenue increased 4pc to $75mn. These diversified end markets help stabilize earnings while Carpenter aerospace demand remains the main engine for margin expansion.

Melt capacity expansion supports multi-year aerospace growth

Carpenter plans to expand both primary and secondary melt capacity through brownfield projects. The company expects these investments to complete in 2027 and says work remains on budget and on schedule. Additional melting capacity will help relieve bottlenecks in high-value specialty alloys required by jet engine and defense customers.

Specialty alloys shipments fell 11pc year on year to 44.8mn lbs, highlighting current capacity tightness and product mix optimization. However, overall profit still surged 44pc to $122.5mn, showing the pricing power of aerospace-grade alloys. As new melt capacity comes online, Carpenter aerospace demand can convert more directly into volume growth rather than just price and mix gains.

Management continues to emphasize a “strong, multi-year outlook” for aerospace, defense, medical and power generation markets. The 737 MAX ramp, together with broader fleet renewal and engine upgrade programs, should keep Carpenter aerospace demand elevated well beyond this year. The company is positioning its footprint to support higher OEM build rates and long-term aftermarket needs.

The Metalnomist Commentary

Carpenter aerospace demand illustrates how incremental changes in OEM build caps can cascade through the alloy supply chain. The 737 MAX increase looks small in monthly units, but it drives multi-year demand for complex nickel and titanium-based products. For metals suppliers, the combination of locked-in contracts, melt expansion and tight aerospace specifications points to sustained pricing power, even if some industrial segments lag.