25 Nov

What Do China’s Demand Indicators Mean for Alcoa Stock?

WRITTEN BY Mohit Oberoi, CFA

China’s demand indicators

Since China is the world’s largest aluminum consumer, it’s important for investors in companies such as Alcoa (AA), Century Aluminum (CENX), and Norsk Hydro (NHYDY) to keep track of China’s aluminum demand indicators (MCHI) (ACH).

The real estate sector is among the largest aluminum consumers. Let’s look now at China’s October real estate investment data.

What Do China’s Demand Indicators Mean for Alcoa Stock?

Real estate indicators

The total floor area in square meters under construction by Chinese real estate development companies rose 3.3% YoY (year-over-year) in the first ten months of 2016. The growth rate rose 0.10 percentage points compared to the first nine months of the year.

China’s new construction starts rose 8.1% YoY in the first ten months of 2016. The growth rate rose 1.3 percentage points compared to the first nine months of the year.

Building sales

In the first ten months of 2016, building sales rose 26.8% YoY in China. However, the growth rate fell 0.10 percentage points compared to the first nine months of the year. It was the sixth consecutive month that growth rates fell on a monthly basis.

It’s important to remember that some Chinese cities have tightened home buying rules in a bid to control overheating in the property market.

Overall, China’s real estate investment data were better-than-expected in October. We also saw a modest recovery in China’s real estate climate index that month, as you can see in the above graph. Improvement in China’s aluminum demand indicators is positive for companies such as Alcoa.

There are other leading indicators of China’s aluminum demand at work. We’ll take a look at those in the next part.

Latest articles

The total refiners capacity in the US is around 18.8 million barrels per calendar day. The refinery utilization rate in 2018 was 93%.

Today's Snap earnings (SNAP) are a textbook example of how irrational, or at least unpredictable, market reactions can be.

On October 15, Aphria reported its Q1 earnings. Although Aphria's revenue came in lower than expected, its EBITDA and EPS beat analysts’ expectations.

Back-to-back dismal quarterly performance and a downbeat outlook have kept analysts increasingly cautious about FedEx's (FDX) growth prospects.

Texas Instruments (TXN) reported disappointing Q3 earnings and guidance. Its revenue fell 11.5% YoY to $3.77 billion, missing the estimate by 1.3%.

On October 22, Sprint announced that its True Mobile 5G service covers 16 million people in nine cities. That day, Sprint fell 1.1% and closed at $6.35.