Tough Times for Alcoa as Grexit Concerns Hit Base Metals



Grexit concerns

In our previous series, we highlighted that the worst might not yet be over for Alcoa (AA) and other aluminum producers. Aluminum prices had one of their worst months yet, and crashed 12% in May alone.

Fortunes have turned upside down for the aluminum industry this year. Most aluminum producers delivered decent returns last year. In contrast, steel and iron ore companies had a horrid run on the stock markets. The performance of copper producers was also quite dismal in 2014.

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Dismal stock market performance

The worsening fundamentals of the aluminum industry are visible in the share prices of aluminum companies as well. The previous chart shows the recent stock market performance of aluminum plays. Alcoa recently touched its 52-week low and continues to be weak. Alcoa and RTI Metals (RTI) together make up 4.1% of the SPDR S&P Metals and Mining ETF (XME).

Century Aluminum (CENX) has lost more than half of its value this year. Norsk Hydro (NHYDY) also hit a new 52-week low on June 17.

What do we cover in this series?

In this series, we’ll analyze some of the recent economic indicators and discuss their impact on Alcoa. Alcoa is the leading aluminum producer in North America and has operations across the value chain. It produces primary aluminum as well as high precision parts for the aerospace industry.

Meanwhile, Grexit (or the Greek exit from the European Union) concerns seem to have hit the base metals markets. In the next part, we’ll discuss how aluminum has been caught in the global metal meltdown.


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