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Alcoa Benefits From Strong US Aluminum Demand

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Strong US aluminum demand

We’ve looked at the global aluminum markets in previous parts of this series. Now, we’ll look at the trends in US markets. Alcoa (AA) is the largest aluminum company in the US. It benefits from strong demand in the North American market. Century Aluminum (CENX) is another major US aluminum company.

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Aluminum demand increased 14% in September

US aluminum demand increased by ~14% in September. Aluminum demand is up ~5% year-over-year, or YoY, in the first nine months. This is a healthy sign for the aluminum industry. The US is one of the biggest aluminum consumers in the world. As a result, healthy demand in the US is a positive sign for the global aluminum industry.

Constellium (CSTM) announced the acquisition of a privately-held aluminum company in the US. The acquisition will give CSTM a footprint in the US markets. Before the acquisition, CSTM only got ~13% of its revenues from the US. After the acquisition, CSTM will get close to one third of its revenues from the US.

Rio Tinto (RIO) and BHP Billiton (BHP) are some of the largest aluminum producers. The SPDR S&P Metals and Mining ETF (XME) invests in these companies.

Why is aluminum demand strong in the US?

Demand from automotive companies has been driving aluminum companies’ revenues. Using aluminum sheets to make auto bodies reduces the vehicle’s weight. This helps increase the vehicle’s fuel economy.

Ford launched the new F-150. The truck has a full-aluminum body. The truck should be in showrooms in 1Q15. Investors in aluminum plays should watch the F-150 sales closely.

Now, we’ll look at latest developments in the aluminum industry. In the next part of this series, we’ll look at the movement in aluminum prices.

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