The rumors are again making the rounds that Rio Tinto (NYSE:RIO) may be interested in acquiring Alcoa (NYSE:AA).
Speculation circulating is Rio Tinto has secured a $25 billion syndication loan to make the purchase.
Traders bid up the share price of Alcoa to $17.74, gaining $0.52, or 3.02 percent, as of 12:09 PM EDT. Options activity also jumped on the rumor, specifically $18 strike calls that expire later in May, as well as June $18 calls. Also attracting attention were the May $19 and June $19 strike calls.
It's doubtful Rio would really be interested in exposing itself to even more aluminum, as the future is far from clear on the supply and demand outlook, and by extension pricing strength and margins.
Rio would probably also face intense regulatory scrutiny because of its past acquisition of Alcan.
Either way, you never know what a company may do. But the idea of aluminum being a major growth metal and market isn't convincing at this time.
Showing posts with label Aluminum Demand. Show all posts
Showing posts with label Aluminum Demand. Show all posts
Tuesday, May 3, 2011
Friday, April 8, 2011
Alcoa (NYSE:AA): An Earnings Preview
The faltering economy and soaring commodity prices are finally cutting into unjustified optimism in the market, taking something away from the unofficial start of the earnings seasons with Alcoa's (NYSE:AA) earnings report on Monday.
More than likely Alcoa will have a super quarter to report, but things have changed so much that the only element investors are seemingly, and rightfully interested in is guidance.
The biggest concern going forward is whether or not Alcoa will be able to take advantage of rising aluminum prices when at the same time raw-materials inputs and transportation costs are rising. That's not a guarantee any longer.
So while demand has been and will be stronger, margins and earnings could come under extreme pressure, negating the value rising prices and increased demand, which under normal economic conditions would be a big boon for Alcoa and the aluminum industry.
So the projected 12 percent boost in aluminum consumption has yet to be proven to be a positive for Alcoa. The one good thing is they were able to cut back on costs during the recession, resulting in a leaner company, which should help it going forward.
Even with Alcoa's 12 percent projection, that's no longer a guarantee, as rising gas prices and fuel costs in the airline and automotive industries, which are among the company's major customers, are undergoing extreme stress at this time, with no clue as to how long it'll last.
That includes the parts shortages because of the earthquake in Japan as well as declining numbers of passengers on airlines, which could have an effect on capex. That could be bad news for Alcoa.
The major problem Alcoa faces is just about every key market it serves is back to undergoing stress, including construction and the industries already named above. Consumer spending appears to be stronger, but that could, and probably will, slow down as gas prices go up or remain level.
All this has been said to reiterate the fact that the performance of Alcoa last quarter has already lost its thunder, and the expected earnings of 27 cents a share and $6.16 billion in sales, even if the company exceeds it, which they could, will be a bittersweet victory for it.
The bottom line for Alcoa is what appeared to be a surety of terrific growth and earnings just a short time ago for the next couple of years, has suddenly and quickly changed into a complete uncertainty.
It'll be interesting and vital to hear what the company says about the impact of events and costs on those sectors of the market it serves on guidance.
Alcoa was trading at $17.82, falling $0.30, or 1.66 percent, as of 2:58 PM EDT.
More than likely Alcoa will have a super quarter to report, but things have changed so much that the only element investors are seemingly, and rightfully interested in is guidance.
The biggest concern going forward is whether or not Alcoa will be able to take advantage of rising aluminum prices when at the same time raw-materials inputs and transportation costs are rising. That's not a guarantee any longer.
So while demand has been and will be stronger, margins and earnings could come under extreme pressure, negating the value rising prices and increased demand, which under normal economic conditions would be a big boon for Alcoa and the aluminum industry.
So the projected 12 percent boost in aluminum consumption has yet to be proven to be a positive for Alcoa. The one good thing is they were able to cut back on costs during the recession, resulting in a leaner company, which should help it going forward.
Even with Alcoa's 12 percent projection, that's no longer a guarantee, as rising gas prices and fuel costs in the airline and automotive industries, which are among the company's major customers, are undergoing extreme stress at this time, with no clue as to how long it'll last.
That includes the parts shortages because of the earthquake in Japan as well as declining numbers of passengers on airlines, which could have an effect on capex. That could be bad news for Alcoa.
The major problem Alcoa faces is just about every key market it serves is back to undergoing stress, including construction and the industries already named above. Consumer spending appears to be stronger, but that could, and probably will, slow down as gas prices go up or remain level.
All this has been said to reiterate the fact that the performance of Alcoa last quarter has already lost its thunder, and the expected earnings of 27 cents a share and $6.16 billion in sales, even if the company exceeds it, which they could, will be a bittersweet victory for it.
The bottom line for Alcoa is what appeared to be a surety of terrific growth and earnings just a short time ago for the next couple of years, has suddenly and quickly changed into a complete uncertainty.
It'll be interesting and vital to hear what the company says about the impact of events and costs on those sectors of the market it serves on guidance.
Alcoa was trading at $17.82, falling $0.30, or 1.66 percent, as of 2:58 PM EDT.
Wednesday, April 6, 2011
Alcoa (AA) Soars to 52-Week High
Shares of Alcoa (NYSE:AA) surged to 52-week highs on Tuesday, as the company closes in on its earnings report day, which is considered the kick-off of the earnings season.
Anticipation has been building as the company took time during the worst parts of the recession to lower costs, and now from that strong position the price of aluminum has been rising, along with aluminum demand, creating a growing expectation that the company will have a good quarterly report and guidance.
That also means margins and earnings should have risen significantly, as well as revenue in the quarter.
Once concern would be if there are any consequences going forward from the earthquake in Japan in regard to markets Alcoa serves, such as with auto makers. That will have no effect on the latest quarter, but it possibly could on guidance.
Alcoa closed Tuesday at $18.05, gaining $0.49, or 2.79 percent.
Anticipation has been building as the company took time during the worst parts of the recession to lower costs, and now from that strong position the price of aluminum has been rising, along with aluminum demand, creating a growing expectation that the company will have a good quarterly report and guidance.
That also means margins and earnings should have risen significantly, as well as revenue in the quarter.
Once concern would be if there are any consequences going forward from the earthquake in Japan in regard to markets Alcoa serves, such as with auto makers. That will have no effect on the latest quarter, but it possibly could on guidance.
Alcoa closed Tuesday at $18.05, gaining $0.49, or 2.79 percent.
Friday, April 1, 2011
Market Likes Alcoa's (AA) Pricing Power
For the long term, the market likes the new-found ability for Alcoa (NYSE:AA) to raise prices on a number of its products, something it hasn't been able to do over the last couple of years, until recently.
If a company can raise prices it means it has market and competitive strength, something that Alcoa does have at this time, even if it's somewhat tenuous in the aftermath of the earthquake in Japan, which could dramatically affect aluminum demand in the auto and tech industries.
The other good news is Alcoa did spend its time wisely during the worst part of the recession, focusing on cutting costs, as it was about the only thing they could do it had control over. They do have more room to improve there, but it has made them more competitive as a result.
Now that they're leaner, they can raise price in a way that increases earnings, and not just to keep up with rising input costs. That bodes well for the company and shareholders if the company can maintain this position and the economy and markets cooperate.
Alcoa was trading at $17.61, falling $0.05, or 0.25 percent, as of 2:21 PM EDT.
If a company can raise prices it means it has market and competitive strength, something that Alcoa does have at this time, even if it's somewhat tenuous in the aftermath of the earthquake in Japan, which could dramatically affect aluminum demand in the auto and tech industries.
The other good news is Alcoa did spend its time wisely during the worst part of the recession, focusing on cutting costs, as it was about the only thing they could do it had control over. They do have more room to improve there, but it has made them more competitive as a result.
Now that they're leaner, they can raise price in a way that increases earnings, and not just to keep up with rising input costs. That bodes well for the company and shareholders if the company can maintain this position and the economy and markets cooperate.
Alcoa was trading at $17.61, falling $0.05, or 0.25 percent, as of 2:21 PM EDT.
Alcoa (AA) Quarterly Earnings Picking Up Over 2010
With little to do during the recession but focus on improving its cost structure, Alcoa (NYSE:AA) has positioned itself to benefit when a real recovery comes along, and even if we're in a temporary one, the aluminum producer should report a solid quarter as the price of aluminum has jumped during that time.
Credit Agricole Securities analyst David Lipschitz, said, “As aluminum prices are going higher, Alcoa is also rising. Earnings have picked up significantly from higher aluminum prices from a year ago.”
While Alcoa still has some work to work on its costs, the improvement will be enough, along with the higher price of aluminum, to provide solid results.
Industries that have helped it run recently include the auto and aerospace industries, although how they perform in the next quarter could be impacted from the consequences in the auto industry from parts shortage coming from the impact of the earthquake in Japan.
Alcoa closed Thursday at $17.66, gaining $0.02, or 0.11 percent. The company is trading near the top of its 52-week range.
Credit Agricole Securities analyst David Lipschitz, said, “As aluminum prices are going higher, Alcoa is also rising. Earnings have picked up significantly from higher aluminum prices from a year ago.”
While Alcoa still has some work to work on its costs, the improvement will be enough, along with the higher price of aluminum, to provide solid results.
Industries that have helped it run recently include the auto and aerospace industries, although how they perform in the next quarter could be impacted from the consequences in the auto industry from parts shortage coming from the impact of the earthquake in Japan.
Alcoa closed Thursday at $17.66, gaining $0.02, or 0.11 percent. The company is trading near the top of its 52-week range.
Wednesday, February 16, 2011
Century Aluminum (NASDAQ:CENX) Turns it Around in Fourth Quarter
Century Aluminum (NASDAQ:CENX) generated a profit in the fourth quarter, turning things around after a lost in the same quarter last year.
Net income surged to $59.94 million, or $0.64 a share, far above the $24.35 million, or $0.28 a share the company lost last year in the same quarter. Analysts had been looking for earnings of $0.22 a share.
Revenue for the quarter increased to $316.85 million, soaring above the $256.81 million last year. Analysts estimated revenue of $306.13 million.
Net profit was $65.3 million, or 64 cents a share, against a loss of $24.4 million, or 28 cents a share, in the same quarter of 2009
Increased demand and higher aluminum prices boosted the results for the company.
Century Aluminum closed Tuesday at $15.45, dropping $0.38, or 2.40 percent.
Net income surged to $59.94 million, or $0.64 a share, far above the $24.35 million, or $0.28 a share the company lost last year in the same quarter. Analysts had been looking for earnings of $0.22 a share.
Revenue for the quarter increased to $316.85 million, soaring above the $256.81 million last year. Analysts estimated revenue of $306.13 million.
Net profit was $65.3 million, or 64 cents a share, against a loss of $24.4 million, or 28 cents a share, in the same quarter of 2009
Increased demand and higher aluminum prices boosted the results for the company.
Century Aluminum closed Tuesday at $15.45, dropping $0.38, or 2.40 percent.
Tuesday, January 11, 2011
Alcoa (NYSE:AA) Beats Estimates, Sees Growth in Most Markets
Alcoa (NYSE:AA) reported earnings Monday which beat analysts' estimates, as sales grew in a variety of their segments.
Net income for the quarter came to $258 million, or 24 cents a share, a huge increase over the $277 million, or 28 cents a share loss in same period last year. Analysts had been looking for 18 cents a share.
Revenue increased from $5.43 billion a year ago to $5.65 billion, a 4 percent gain.
Net income for the increased to $254 million, or 25 cents a share, in contrast to the lost last year of $1.15 billion, or 1.23 a share. Revenue on the year increased from $18.4 billion to $21 billion.
The performance was from a combination of improved sales in key markets of the company, as well as an approximate 13 percent increase in aluminum prices in the quarter.
Going forward, Alcoa looks to the auto sector as its biggest growth engine for 2011, where sales are expected to surge by 11 percent.
Aluminum demand has been estimated by Alcoa to grow by 12 percent in 2011 as well.
Pricing has helped, but Alcoa is totally exposed to macro-economic conditions, and if there is sustainable growth they'll do well, but if not, they'll struggle.
Net income for the quarter came to $258 million, or 24 cents a share, a huge increase over the $277 million, or 28 cents a share loss in same period last year. Analysts had been looking for 18 cents a share.
Revenue increased from $5.43 billion a year ago to $5.65 billion, a 4 percent gain.
Net income for the increased to $254 million, or 25 cents a share, in contrast to the lost last year of $1.15 billion, or 1.23 a share. Revenue on the year increased from $18.4 billion to $21 billion.
The performance was from a combination of improved sales in key markets of the company, as well as an approximate 13 percent increase in aluminum prices in the quarter.
Going forward, Alcoa looks to the auto sector as its biggest growth engine for 2011, where sales are expected to surge by 11 percent.
Aluminum demand has been estimated by Alcoa to grow by 12 percent in 2011 as well.
Pricing has helped, but Alcoa is totally exposed to macro-economic conditions, and if there is sustainable growth they'll do well, but if not, they'll struggle.
Monday, January 10, 2011
Alcoa (NYSE:AA) Restarting Idled Potlines at 3 Smelters in U.S.
Alcoa (NYSE:AA) announced on Friday it is going to restart potlines at 3 aluminum smelters based in the U.S.
The company said the potlines to be restarted are at the Massena East facility in Massena, N.Y.; Wenatchee Works in Malaga, Washington; and Intalco in Ferndale, Washington.
Alcoa's initiative will add close to 260 jobs through hiring and recall, they said in a statement.
After the restarts are in place, it is expected to increase aluminum production by 137,000 metric tons throughout 2011 and by and additional 200,000 metric tons annually after that.
The reason for the restarts are to meet obligations Alcoa has to power companies over the long term and in response to expected increases in aluminum demand.
According to the company statement, they still have 674,000 metric tons of idle factory capacity.
Alcoa closed Friday at $16.42, gaining $0.06, or 0.37 percent.
The company said the potlines to be restarted are at the Massena East facility in Massena, N.Y.; Wenatchee Works in Malaga, Washington; and Intalco in Ferndale, Washington.
Alcoa's initiative will add close to 260 jobs through hiring and recall, they said in a statement.
After the restarts are in place, it is expected to increase aluminum production by 137,000 metric tons throughout 2011 and by and additional 200,000 metric tons annually after that.
The reason for the restarts are to meet obligations Alcoa has to power companies over the long term and in response to expected increases in aluminum demand.
According to the company statement, they still have 674,000 metric tons of idle factory capacity.
Alcoa closed Friday at $16.42, gaining $0.06, or 0.37 percent.
Monday, January 3, 2011
Alcoa (NYSE:AA) Rises on Deutsche (NYSE:DB) Upgrade, Worst is Past
Alcoa (NYSE:AA) has been struggling for some time on weak aluminum prices and demand, but Deutsche Bank (NYSE:DB) upgraded them today, citing more operational stability within the company and improved sentiment over aluminum pricing and demand.
Deutsche said, "Alcoa's laggard status has piqued investor interest in the name as a possible come-back play for 2011 and given signs of operational stability, we don't disagree.
"Investors have clearly been negative aluminum through 2010; however, our sense is that the 'worst' is already passed."
Everyone is optimistic on the first trading day of 2011, but the idea that there are legs under the alleged beginnings of a recovery are weak indeed, and the idea aluminum is poised for a comeback is more optimism than fact, and it remains to be seen if there is really a recovery in the manufacturing sector in 2011, which the cyclical Alcoa will depend on.
Deutsche upgraded Alcoa to a "Buy" today, which was trading at $15.95, up 0.56, or 3.64 percent, as of 2:19 PM EST. Deutsche raised their price target on Alcoa from $14 to $22.
Deutsche said, "Alcoa's laggard status has piqued investor interest in the name as a possible come-back play for 2011 and given signs of operational stability, we don't disagree.
"Investors have clearly been negative aluminum through 2010; however, our sense is that the 'worst' is already passed."
Everyone is optimistic on the first trading day of 2011, but the idea that there are legs under the alleged beginnings of a recovery are weak indeed, and the idea aluminum is poised for a comeback is more optimism than fact, and it remains to be seen if there is really a recovery in the manufacturing sector in 2011, which the cyclical Alcoa will depend on.
Deutsche upgraded Alcoa to a "Buy" today, which was trading at $15.95, up 0.56, or 3.64 percent, as of 2:19 PM EST. Deutsche raised their price target on Alcoa from $14 to $22.
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