Alcoa and Century Aluminum to Benefit From Stabilized Prices and Skyrocketing Demand
October 19 2011 - 8:16AM
Marketwired
Aluminum prices have fallen approximately 10 percent this year amid
concerns that the global economic slowdown may cut demand for raw
materials. While that number may be alarming, ten percent is the
smallest drop among the six industrial metals traded on the London
Metal Exchange. Aluminum demand remains fairly strong as more of
the metal is used in electronics, cans and transportation and
construction. The Bedford Report examines the outlook for companies
in the Aluminum industry and provides equity research on Alcoa,
Inc. (NYSE: AA) and Century Aluminum Co. (NASDAQ: CENX). Access to
the full company reports can be found at:
www.bedfordreport.com/AA
www.bedfordreport.com/CENX
According to researcher CRU, Aluminum will have the biggest
annual demand increase among industrial metals through 2015 as its
surplus turns to a shortage. The researcher argues that consumption
will outpace supply in 2015 as demand grows an average 7.6 percent
a year.
Aluminum has been taking on a bigger role in electronics
products as designers have started to use more environmentally
friendly materials. Industry experts explain that the metal is
easily recycled with no loss in quality. Moreover, the push by
automotive and aerospace companies to create lighter and
consequently more fuel efficient vehicles has also helped to
bolster demand for lightweight aluminum. Alcoa spokesman Kevin
Lowery said Aluminum's density is one-third that of steel.
The Bedford Report releases stock research on the aluminum
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Last week Alcoa announced that third quarter net income rose to
$172 million, or 15 cents a share, from $61 million, or 6 cents, a
year earlier. Sales increased 21 percent to $6.4 billion, beating
the $6.23 average of nine analyst estimates. Chairman and Chief
Executive Klaus Kleinfeld said he sees stable prices in the near
future for the raw materials used in making aluminum. Kleinfeld is
blaming falling aluminum prices on negative bets from the financial
industry.
Better demand helped companies like Century Aluminum increase
second quarter shipments. Century shipped roughly 334 million
pounds in the quarter compared to 319 million pounds in the prior
year period.
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