Alcoa, the largest US aluminium producer, still sees global demand for aluminium products growing 7 per cent this year, signalling a potential price rise for the metal as bulging Chinese aluminium inventories begin to dwindle.
The solid demand, driven by the aerospace and commercial transportation sectors, should combine with industry-wide production cuts already in place to reduce a supply glut that has driven down aluminium prices by 13 per cent this year.
Alcoa on Monday affirmed its demand forecast, even as it posted a net loss in the second quarter, due to restructuring costs related to plant closures.
On an adjusted basis, it achieved a larger-than-expected profit thanks to productivity gains and a strong performance from its engineered products business, which makes high-margin goods like aerospace fasteners, turbine blades and truck wheels.
“It was a good, solid quarter. Alcoa continues to show they can cut costs and will be a survivor,” said Tim Ghriskey, chief investment officer of Solaris Asset Management, which owns some Alcoa bonds. “This is a company that remains profitable and strong despite the tough environment.”
Shares of Alcoa, which closed at US$7.92 on the New York Stock Exchange shortly after the results, were little changed in trading after the closing bell.