What Aluminum Industry Indicators Are Key For Alcoa Investors?



Key aluminum industry indicators

In terms of use, aluminum is the second metal that’s used the most. Investors also like aluminum—whether it’s trading physical metal on the LME (London Metal Exchange) or investing in aluminum plays. It’s important that investors understand the key aluminum industry indicators.

Alcoa (AA) is the largest aluminum company in the US. In this series, we’ll provide an overview of the aluminum industry’s key indicators. We’ll also analyze how crude oil prices impact aluminum plays.

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Playing the aluminum industry

There are several ways to play the aluminum industry. You can invest in primary aluminum producers—like Rio Tinto (RIO) and BHP Billiton (BHP). They’re among the biggest aluminum producers. The issue with these companies is that their aluminum operations don’t form a very big part of their business. The aluminum business forms less than 5% of their annual profits. These companies are the upstream aluminum players.

Century Aluminum (CENX) can also give you exposure to the aluminum industry. It’s a pure-play upstream player. It produces primary aluminum. However, CENX doesn’t own bauxite mines. Aluminum investors should also learn about aluminum’s value chain.

You can also consider downstream players—like Constellium (CSTM) and Kaiser Aluminum (KALU). CSTM is a leading aluminum fabricator. It doesn’t produce primary aluminum. However, it produces value-added aluminum products.

AA is a diversified player

AA is a diversified player in the aluminum industry. It has upstream and downstream operations. Under its transformation strategy, AA is restructuring its operations to become a multi-material company. Currently, AA is among the top ten holdings of the SPDR S&P Metals and Mining ETF (XME).

We’ll discuss the aluminum industry’s key indicators. In the next part of this series, we’ll discuss global indicators.


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