Alcoa Cuts Global Aluminum Forecast on China Slowdown

Alcoa Inc., the largest U.S. aluminum producer, cut its forecast for global consumption of the metal by 1 percentage point on slowing Chinese demand, helping to trigger a decline in Asian stocks for a third day.

Demand will climb by 6 percent this year, the New York- based company said yesterday in its third-quarter earnings statement. That’s 14 percent less than its July forecast that usage would rise 7 percent.

“We do see a slight slowdown in some regions in end markets, and the main driver for this is China,” Chairman and Chief Executive Officer Klaus Kleinfeld said in a conference call with analysts. Chinese demand may pick up at the end of the fourth quarter because of stimulus spending, he said.

The forecast cut by Alcoa, typically the first company on the Dow Jones Industrial Average to report earnings, comes a day after the International Monetary Fund and Rio Tinto Group, the world’s third-biggest mining company, trimmed their growth outlook estimates for China. Aluminum prices in London touched a 34-month low in August as global supply exceeded demand.

Alcoa fell 0.9 percent to $9.05 at 7:49 p.m. yesterday after the close of regular trading in New York. The MSCI Asia Pacific Index slipped 0.8 percent at 12:11 p.m. in Tokyo, while Aluminum Corp. of China Ltd., the nation’s biggest producer, declined as much as 2.1 percent in Hong Kong.

Demand from heavy-truck and trailer manufacturing will fall in 2012, Alcoa said. It now sees Chinese truck and trailer output declining as much as 21 percent, compared with a drop of as much as 8 percent projected three months ago. Chinese can and packaging growth may be 8 percent, down from Alcoa’s July forecast of as much as 20 percent.

The IMF yesterday cut its global growth forecast and lowered its projected expansion for China, the world’s biggest aluminum user, by 0.2 percentage point annually, to 7.8 percent this year and 8.2 percent in 2013. London-based Rio, which has pulled back from projects as sluggish global growth reduced demand for metals, yesterday lowered its estimates for China’s growth to below 8 percent.

Net Loss

Alcoa had a third-quarter net loss of $143 million, or 13 cents a share, compared with net income of $172 million, or 15 cents, a year earlier as sales dropped 9.2 percent. Excluding costs related to environmental remediation and the settlement of a lawsuit brought by Aluminium Bahrain BSC (ALBH), Alcoa had per-share profit of 3 cents. The average of 18 estimates (AA) compiled by Bloomberg was for break-even earnings per share.

“We are clearly seeing the impact of a Chinese slowdown globally and it’s indicated in Alcoa’s numbers,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages almost $100 billion.

Alcoa reiterated that demand will increase this year in the global aerospace, autos, packaging and construction industries.