Alcoa Inc (AA): Troubled Aluminum Giant Seeks the Light

Alcoa Inc (NYSE:AA) has recently made the news for several reasons, some good, others not. The good news is the announcement that activity will double at its Kawneer asset located in Irurtzun, Spain. Production there is said to focus on standard and custom products for national and international projects. The last major order was for 17,000 aluminum panels for the Lycée Georges Frêche. Also, new offices and a logistic and industrial platform will be constructed in Montpellier, France, to give support to activities in the Iberian Peninsula.


Alcoa


On another note, Alcoa Inc (NYSE:AA) and the United Company Rusal, asked the London Metal Exchange for more transparency. More specifically, the companies wish to have access to information concerning short and long-term stockholders. Both companies have argued that they need to understand how the market behaves these days, and the proposed changes forward by the LME do not address this issue. In other words, the companies wish the LME to behave more like the US Commodity Future Trading Commission. This last institution requires that stock exchanges make public detailed information concerning holdings.


At last, the DOW Jones Industrial Average has dropped Alcoa Inc (NYSE:AA). According to DOW Jones’ representative, the decision comes as a result of the sagging stock prices and the index committee’s desire to diversify the mix of companies represented. This is a very negative sign for the company that has been part of the index for the past 59 years. But, with aluminum prices never fully recovering after the Great Recession, and a steady decline through the last two years, the decision comes as no surprise.


With no clear signs of a pick up on the price of aluminum, it is hard to entertain the idea of activities expanding for Alcoa Inc (NYSE:AA). I mean, how will the firm finance doubled operations in Spain and infrastructure expansion in France with a falling aluminum price? Also, competitors have not expressed any intention or wish to reduce production rates in order to drive aluminum prices up in the long-run making the future more troubled than its present.


Disclosure: Jodor Jalit holds no position in any stocks mentioned.


Recommended Reading


Is the Dow (.DJI) Making a Mistake Giving Alcoa Inc (AA) the Boot?


Alcoa Inc (AA), Hewlett-Packard Company (HPQ): Why Bank of America Corp (BAC) Was Ousted From the Dow


Industrials Updates: General Electric Company (GE) on Oil and Gas, Alcoa Inc (AA)’s Strategy, DryShips Inc. (DRYS)’s Rise

Sign Up

Get the InvestingChannel
Free e-Letter Today

Learn More

Independent market opinion, analysis and ideas - delivered every business day

Premium market opinions, analysis, and ideas - delivered every business day

Editor's Picks