The 3Q15 earnings season
The 3Q15 earnings season is nearly over. Most aluminum companies have reported their earnings for the quarter. In this series, we’ll explore some of the key highlights of major aluminum companies’ 3Q15 earnings. We’ll also look at what various aluminum companies said about the industry outlook during their 3Q15 earnings calls.
It’s been a lackluster year for companies operating in the commodities space (DBC). Aluminum prices dipped to six-and-a-half-year lows in 3Q15. Prices did recover somewhat during the beginning of September but again resumed their downslide to hit fresh six-and-a-half-year lows. Aluminum has looked the most vulnerable in the base metals space due to concerns over the Chinese aluminum exports. This is despite the fact that aluminum demand is still much stronger as compared to other metals including copper and steel.
In the above graph, you can see the recent movement in aluminum companies’ stock. 2015 has been nothing short of a nightmare for the aluminum industry. Alcoa (AA) and Century Aluminum (CENX) have lost 45% and 85%, respectively, so far in 2015. Constellium (CSTM) is down ~50% year-to-date.
South32 (SOUHY), which spun off from BHP Billiton (BHP), has also been on a losing streak since it was listed as a separate company. Alcoa is also planning to split into two companies in 2H16. Read Will Alcoa’s Splitting into 2 Companies Add Shareholder Value to learn more about the split.
The Chinese slowdown has spelled doom for aluminum companies. Aluminum producers have announced production cutbacks to survive in the current low-price environment. In the next part, we’ll explore aluminum companies’ 3Q15 shipments and future production plans.