Alcoa (AA) closed at $44.42 on September 5. So far, the stock has risen more than 58% in 2017. Looking at the year-to-date performance, 2017 started on a positive note for Alcoa as well as the broader metals and mining sector (XME). Alcoa made a closing high of $38.54 on February 14, 2017. However, the stock saw selling pressure after that. The fall in Alcoa stock coincided with Arconic’s (ARNC) stake sale in the company.
Alcoa continued to trade weak in April and May. We also saw weakness in aluminum prices (RIO). Among other factors, Chinese aluminum exports, which rose to the second-highest level on record in May, contributed to aluminum’s fall. In the meantime, the Trump Administration’s decision to order a Section 232 investigation into US aluminum imports provided a brief respite for US-based producers like Century Aluminum (CENX).
Alcoa was strong in August. We saw a smart rebound in metal prices including aluminum. Metal prices have moved out of their narrow price channels. For instance, copper is trading above $6,500 per metric ton. It broke the shackles of the $6,000 per metric ton level.
After the spectacular run so far, investors could be left guessing what lies ahead for Alcoa. In this series, we’ll look at the different headwinds and tailwinds that Alcoa could face in the near term. We’ll also look at Alcoa’s 3Q17 earnings estimates. We’ll see how markets are valuing Alcoa amid the current market scenario.
Let’s start by looking at the recent trend in aluminum prices.