19 JUNE 2013www.gdpinsider.com
Alcoa's woes reiterated by over supply and price fall
Edited by : AL CIRCLE
2 min read
It is said that the tough will only get tougher when the road is rough and Alcoa Inc., the leading aluminum producer in the world, is flexing its muscles every single day.
The massive aluminum glut and dropping aluminum prices are the two demons that the company has been waging a war with for some time now and its performance has taken a hit. The company’s first quarter results were a ray of sunshine and analysts did sit up and take notice.
The root of Alcoa’s woes lies in the current overcapacity in aluminum markets. Barclays has said that 2013 will be the 9th consecutive year in which supply will exceed the demand. This year, analysts have projected a surplus capacity of over 1M tons.
This excess will be from China as its production is set to increase by 10% or 2.2M tons in the current year. Producers in China are also cowering under the global oversupply, but government incentives and subsidies buffer them from the blows.
It more than doubled its capacity from 9.3M tons in 2006 to 19.7m tons in 2012.
It’s not just Alcoa that has been affected. Kaiser Aluminum Corp and Century Aluminum are other producers who are trying the find a footing on shaky aluminum ground right now.
The massive aluminum glut and dropping aluminum prices are the two demons that the company has been waging a war with for some time now and its performance has taken a hit. The company’s first quarter results were a ray of sunshine and analysts did sit up and take notice.
The root of Alcoa’s woes lies in the current overcapacity in aluminum markets. Barclays has said that 2013 will be the 9th consecutive year in which supply will exceed the demand. This year, analysts have projected a surplus capacity of over 1M tons.
This excess will be from China as its production is set to increase by 10% or 2.2M tons in the current year. Producers in China are also cowering under the global oversupply, but government incentives and subsidies buffer them from the blows.
It more than doubled its capacity from 9.3M tons in 2006 to 19.7m tons in 2012.
It’s not just Alcoa that has been affected. Kaiser Aluminum Corp and Century Aluminum are other producers who are trying the find a footing on shaky aluminum ground right now.
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