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A Producer of primary aluminum, fabricated aluminum, and alumina, and is active in all major aspects of the industry: technology, mining, refining, smelting, fabricating, and recycling.
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NetscribeManufac (36.72) Submitted: 12/08/06 7:40 AM : Start Price: $29.32 AA Score: -24.90
The story of Alcoa, Inc. affirms its extensive voyage ahead. With major production operations being spread across the United States and Europe, the company has become the world’s leading producer of primary aluminum, fabricated aluminum, and alumina, and is active in all major aspects of the industry including technology, mining, refining, smelting, fabricating, and recycling. With an estimated 24% of the world's bauxite reserves and production across 42 countries, Alcoa enjoys a dominant position in the industry. Catering to a wide range of customers such as aerospace, automobile, commercial transportation, and building and construction, to name a few, the company is well diversified and endowed with adequate opportunity to grow. This is fueled by economic expansion in developing regions and the demand for aluminum that has outstripped global production for the past two years. To count on the same, Alcoa is strategically positioning itself in these regions to exploit the growing demand, given that its costs are nearly 25% lower than most of the domestic producers. On a positive note, continued gains in demand from the aerospace and power generation industries and stabilization in demand for automobile products are expected. With significant relationships with large aluminum consumers such as Boeing and General Motors and ranking as one of their largest suppliers, the company has every opportunity to nurture. Despite the fact that the pricing aspect envisages some concerns for the company, it is believed that the industry will be benefiting from ongoing consolidations leading to a more disciplined pricing environment and less volatility in aluminium prices in the long run. Being an industry leader, the sheer size of the company helps it to afford economies of scale and a low-cost position. Moving ahead and in an attempt to bolster its financial performance, the company is working on an extensive restructuring program focused on its downstream operations, to reduce annual operating costs by approximately $125 million, thereby boosting its margins. Aloca, Inc.’s cash flows are improving and on-balance capital allocation has become more productive and shareholder-friendly. This, coupled with a measured approach by the industry to add capacity, should keep check on prices and margins, over the next several years.
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NetscribeManufac (36.72) Submitted: 4/16/07 7:11 AM
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Alcoa is the world's largest producer of primary aluminum with almost 20% of world’s production and is also the world's largest supplier of alumina, an intermediate raw material used to make aluminum. At the end of fiscal 2006, Alcoa had base capacity of 4,209,000 metric tons per year (mtpy) and Iceland smelter which is expected to complete in early 2007, will add 344,000 mtpy of capacity. For fiscal 2006 company’s revenues increased by 19% to 30.38 billion primarily due to increase in sales to higher metal prices, increased volumes and strong demand for aluminum in the aerospace, commercial transportation, and commercial building markets.In 2006, 59% of its revenue came from the United States and 24% from Europe. Alcoa primarily focuses on aerospace and auto parts, demand for which is expected to grow steadily in United States and Europe. Over past two years metal industry has witnessed many mergers and acquisitions and Alcoa is considered as a potential target in market. In February 2007, there was speculation in market that Australian mining conglomerates BHP Billiton and Rio Tinto are targeting Alcoa for takeover, but there hasn’t been any such action yet. This news had boosted Alcoa’s share price.Alumina and aluminum market fundamentals are expected to remain strong through 2007 and possibly into 2008. Thus, rising demand combined with tight metal supply late in 2006, will likely lead to increase in the price of aluminum in 2007. In order to maintain its position in market Alcoa needs to sustain cost pressure in market. In current scenario higher volumes, productivity and mix are eliminating impact of cost. But from a long term perspective Alcoa needs to come out with cost cutting strategies to counter fierce competition within aluminum market.Currently Alcoa seem to be good pick and would likely maintain its leadership in market for coming fiscal year. But for the years to come it needs to watch out especially Chinese firms, as they have added substantial new capacity over the past several years. It is building up scare in the market, that it will flood market with its products and send aluminum prices substantially lower in years to come.
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jimhelp57 (34.68) Submitted: 8/25/08 4:18 PM
WAKE UP! The technicals for AA are terrible looking forward for the rest of this year. Buy the Sept 35 Put. I've been in the option game for a long time. If you want to make some money...follow my advice.
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