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Alcoa has revised down its 2016 global aluminum demand growth projection to 5%.

As an Alcoa (AA) shareholder, you might like to know whether the split will create value. The value, in this case, would basically mean whether the two separate companies would be worth more than the combined entity.

US Midwest aluminum premiums are currently quoted at $0.07 per pound. Premiums have fallen slightly in July and are now down more than 22% year-to-date.

The decline in alumina prices is a concern for Alcoa. The profitability of its alumina operations would be hit due to lower alumina prices.

Alcoa (AA) has integrated operations. Under the current market scenario, integrated operations could become Alcoa’s competitive advantage.

According to data compiled by Bloomberg, Century Aluminum is expected to post revenues of $445.7 million in its 3Q15 earnings release. In 2Q15, it had net revenues of $523.5 million.

Earlier, Alcoa projected a 1.1 million metric ton deficit for global aluminum markets. It revised down its deficit projection during its 2Q16 conference call.

For commodity companies like Rio Tinto (RIO), the industry outlook is as important, if not more important, than the company’s position in the industry.

Aluminum industry outlook For commodity companies like Rio Tinto (RIO), industry outlook is as important—if not more important—than the company’s position in the industry. Let’s see what senior aluminum executives have had to say about the aluminum industry’s outlook during their companies’ 3Q16 earnings calls. Century Aluminum Century Aluminum (CENX) expects two million metric tons […]

China’s unwrought aluminum exports rose 20.4% YoY in August. Although the increase is a concern, things aren’t as bad as suggested by the big YoY spike.

In 2014, Alcoa (AA) sold its stake in the Mt. Holly smelter to Century Aluminum (CENX).

The question of restarting US plants cropped up during Alcoa’s 4Q16 earnings call. However, Alcoa’s management sounded wary.

Elliott Management noted that it plans to engage in a “constructive dialogue” with Alcoa’s (AA) board regarding Alcoa’s split transaction and “additional available opportunities to maximize shareholder value.”

Alcoa (AA) is an integrated aluminum producer like Rio Tinto (RIO) and Norsk Hydro (NHYDY) and produces alumina and aluminum (DBB).

Alcoa’s (AA) valuation has fallen over the last year. Currently, it trades at a discount to its five-year average. The valuation fell for a reason.

Although lower alumina prices might not immediately lead to a decline in aluminum prices, they certainly could limit aluminum’s upside.

Most aluminum producers’ earnings were received well by markets. Alcoa (AA) saw an upward price action of 5.4% after its earnings release.

In this article, we’ll analyze how analysts are rating Century Aluminum leading up to its 4Q16 earnings.

Alcoa (AA) is gearing up for its split, which is scheduled in the second half of 2016. After the split, the value-added company—which will be named Arconic—will produce precision components and other value-added products.

Norsk Hydro (NHYDY) has announced a production halt at its Alunorte alumina refinery in Brazil.

In 2018, analysts expected disruptions in the copper supply. However, the copper supply has been resilient in 2018.

Century Aluminum (CENX) was among the best-performing aluminum stocks in 2016, with gains of 94%.

Rio Tinto’s (RIO) Aluminum division contributed 19% of its 1H16 underlying EBITDA (or earnings before interest, tax, depreciation, and amortization).

Alcoa (AA) expects to generate adjusted EBITDA between $2.1 billion and $2.3 billion in fiscal 2017. Alcoa assumed aluminum prices at $1,900 per metric ton.

Elliott Management plans to engage in a “constructive dialogue” with Alcoa’s board about Alcoa’s split transaction and “additional available opportunities to maximize shareholder value.”

Weak sentiment in physical aluminum markets could be a reason behind the divergence between Alcoa (AA) and aluminum prices.

While aluminum demand is still rising, there are varying estimates about aluminum consumption.

Alcoa is working to reduce the unit production costs for its plants. If this is not possible, the company could idle these plants.

In 1Q17, there were rumors that Rio Tinto (RIO) could acquire Alcoa.

Currently, Alcoa is trading at 8.6x its forward EBITDA. This valuation multiple looks somewhat aggressive for a pure-play commodity producer.

The unwinding of aluminum financing deals could have a negative impact on aluminum prices. Earnings of aluminum producers such as Alcoa (AA) are sensitive to aluminum prices.

In 2Q17, Arconic generated adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $444 million, up 3% as compared to the corresponding period last year.

Alcoa (AA) released its 1Q17 earnings on April 24 after the markets (MDY) (MID-INDEX) closed. It held the conference call the same day.

During their 2Q16 earnings calls, Century Aluminum (CENX) and Norsk Hydro (NHYDY) expressed concern over higher Chinese supply in the second half of the year.

Alcoa’s technical indicators To make market entry and exit decisions, traders and investors analyze technical indicators. Resistance and support levels are among the most commonly used technical indicators. Resistance level Support levels typically act as a floor for stock prices. As a stock approaches its support levels, more buyers emerge while selling pressure generally subsides. […]

After the split, the new Alcoa (AA) will house the business units that are currently under the Primary Metals and Alumina segments. We’ll look at the challenges that Alcoa could face once it is listed as a separate company.

Alcoa (AA) posted record EBITDA (earnings before interest, tax, depreciation, and amortization) in the second quarter.

In this series, we’ll see how the US aluminum markets have changed since the Trump administration’s implementation of its Section 232 tariffs.

Alcoa (AA) and Century Aluminum (CENX) are trading with double-digit year-to-date losses despite the Section 232 tariffs President Trump imposed.

We saw a sharp sell-off in the equity markets last week. The key driver has been the risk of a trade war.

The Section 232 findings were released on February 16. Between February 19 and March 16, LME aluminum has fallen ~$200 per metric ton.

President Trump has imposed a tariff of 10% on aluminum imports—based on the Department of Commerce’s Section 232 investigation.

China exported 370,000 metric tons of unwrought aluminum in September, compared to 410,000 metric tons in August.

In the first eight months of 2017, Chinese aluminum exports were 3.26 million metric tons—5.8% higher than the same period the previous year.

Aluminum prices have been strong in 2017 and have built on last year’s gains. The entire industrial metals space has come a long way since 1Q16.

As we noted previously, aluminum prices have been strong this year. Strength has been driven by positive supply and demand dynamics.

Century Aluminum (CENX) released its 2Q17 financial results on August 2 after the markets closed. The company reported revenues of $2.86 billion in 2Q17.

Previously in this series, we’ve looked at China’s July steel exports. In this article, we’ll look at the country’s aluminum exports.

Previously in this series, we’ve looked at Alcoa’s (AA) 2Q17 earnings estimates. In this article, we’ll see how leading brokerages are rating Alcoa stock ahead of its 2Q17 earnings release.

During its 1Q17 earnings call, Alcoa (AA) raised its 2017 global aluminum demand forecast to 4.5%–5.0% from its previous guidance of 4.0%.

Alcoa and Century Aluminum (CENX) survives the commodity price slump by closing their high-cost capacities and negotiating better power deals for several operating plants.

Century Aluminum (CENX) was among the best-performing aluminum stocks (NHYDY) (ACH) (SOUHY) last year with gains of 94%.

Three out of four analysts polled by Thomson Reuters rated Century Aluminum as a “hold,” while one analyst rated the stock as a “sell.”

For commodity companies such as Rio Tinto (RIO) and Century Aluminum (CENX), the industry outlook is as important, if not more important, than their positions in the industry.

Aluminum premiums are key indicators that investors in primary producers such as Century Aluminum (CENX), Norsk Hydro (NHYDY), and Rio Tinto (RIO) should track.

Due to Alcoa’s (AA) strong cash flow generation in November and December 2016, its net debt fell below $600 million on December 31, 2016.

Alcoa (AA) has been proactive in controlling its costs to stay competitive in the subdued commodity pricing environment.

For commodity companies like Alcoa and Rio Tinto, the industry outlook is as important—if not more important—than the company’s position in the industry.

Alcoa (AA) has a mean one-year price target of $41.10, which represents a 17.8% upside over its closing price on March 21, 2017.

Century Aluminum (CENX) has a net debt-to-EBITDA multiple of 4.3x. Its leverage ratios are higher compared to Alcoa based on the net debt-to-EBITDA metric.

Looking at the yearly performance, Alcoa generated free cash flows of -$715 million in 2016. We don’t have comparable free cash flows for previous periods.

Alcoa expects to ship 47.5 million bone dry metric tons–48.5 million bone dry metric tons of bauxite in 2017—compared to 2016.

Most aluminum companies have reported their earnings for the quarter. Alcoa (AA) reported its 4Q16 financial results on January 24.

Alumina markets Before we analyze alumina markets, let’s look at aluminum’s value chain. It starts with mining bauxite—one of the most abundant metals in the Earth’s crust. Due to bauxite’s many impurities, it must be refined to produce alumina. This alumina is then processed to produce raw aluminum (SOUHY). Rio Tinto (RIO), Norsk Hydro (NHYDY), and […]

Physical premiums For aluminum producers, the all-in aluminum price consists of the aluminum price plus regional aluminum premiums. The premium is a surcharge that consumers must pay on top of prevailing prices in order to take immediate delivery of the metal from warehouses. Aluminum premiums are a key indicator that investors in primary producers such […]

Alcoa (AA) closed at $34.48 on February 24, gaining 0.47% from the previous day’s close, and having now gained 22.8% YTD.

Century Aluminum (CENX) is expected to release its 4Q16 earnings after the market closes on February 23, 2017.

Alcoa (AA) expects to generate adjusted EBITDA between $2.1 billion–$2.3 billion in fiscal 2017.

Alcoa (AA) has debt liability of ~$1.5 billion, which is composed mostly of notes that were issued in September 2016.

After the split, Arconic (ARNC) held an ~20% stake in Alcoa (AA), which Arconic plans to monetize in 18 months. However, ARNC retained the option to hold Alcoa’s stake for up to five years.

Thanks to Alcoa’s (AA) strong cash flow generation in November and December 2016, its net debt has fallen below $600 million.

In its 2017 EBITDA guidance, Alcoa (AA) assumed aluminum prices of $1,795 per metric ton and an alumina price index of $355 per metric ton.

Alcoa (AA) expects its alumina shipments to range from 13.8 million–13.9 million metric tons in fiscal 2017 compared to 13.2 million metric tons in fiscal 2016.

In fiscal 2016, Alcoa (AA) produced 45.0 million bone dry metric tons of bauxite, 13.2 million metric tons of alumina, and 2.42 million metric tons of aluminum.

Of the 12 surveyed analysts, five recommended Alcoa stock as a “buy,” while only one recommended a “sell” on the stock. Of these analysts, 50% recommended a “hold” on the stock.

Alcoa expects global aluminum markets to be in a surplus in 2017. It expects to generate an adjusted EBITDA between $2.1 billion and $2.3 billion.

Alcoa reported an adjusted EBITDA of $355 million in 4Q16—compared to $284 million in 3Q16. The bauxite and alumina segments contributed the most.

Alcoa reported revenues of $2.54 billion in 4Q16. It’s the first quarter that Alcoa reported its upstream results on a standalone basis after the split.

Alcoa reported its 4Q16 financial results on January 24. Alcoa reported a net loss of $125 million in 4Q16. It translates into a loss per share of $0.68.

While the packaging sector’s demand is more or less stable, the construction and automotive sectors’ demands tend to influence global aluminum demand.

On November 1, 2016, Alcoa (AA) split into two entities: Alcoa and Arconic (ARNC). Let’s take a look at the timeline of Alcoa’s split.

Alcoa has been aggressively pursuing bauxite sales over the last few quarters. It signed contracts valued at ~$600 million for 2016 and 2017.

Of the ten analysts surveyed by Thomson Reuters, four analysts rate Alcoa stock a “buy,” four analysts rate it a “hold,” and two analysts rate it a “sell.”

Aluminum market sentiments improved considerably since the beginning of the year when prices looked set to breach their 2009 lows.

One of the biggest investor concerns about Alcoa’s (AA) split related to the splitting of liabilities—namely, debt and pension liabilities.

Alcoa’s growth drivers changed after the split. Improved commodity market sentiments are also helping Alcoa and other primary producers.

China’s economic growth rates could be impacted when Donald Trump takes office. His tough stance on imports from China could be negative for its economy.

Chinese aluminum demand has been better this year due to the stimulus from the government. The higher demand supported aluminum prices.

Although China’s real estate demand indicators started to show signs of moderation after the big rise earlier this year, car sales continued to swell.

One of the major challenges for the global aluminum industry has been the rise in Chinese aluminum exports.

Since China is the world’s largest aluminum consumer, it’s important to keep track of China’s aluminum demand indicators.

There’s been a broad-based rally in commodity prices since Trump won the election. But several fundamental factors are also supporting aluminum prices.

Alcoa’s (AA) earnings are sensitive to commodity prices. It expects its annual EBITDA to rise $233.0 million for every $100-per-metric-ton rise in aluminum prices.

Although the LME three-month aluminum contract has pared some of its post-election gains, it’s still trading in the ballpark of $1,700 per metric ton.

In addition to production, it’s also important to follow aluminum companies’ profitability metrics.

Mining companies don’t have pricing power due to the commoditized nature of their business, and so changes in shipments tend to determine revenue changes.

Companies such as Rio Tinto (RIO), Norsk Hydro (NHYDY), and Alcoa (AA) have alumina refining and aluminum smelting operations.

Producers such as Rio Tinto, Alcoa, and Norsk Hydro have captive power plants to generate electricity and buy the remaining electricity from third parties.

In this article, we’ll see what Donald Trump’s presidency could mean for Alcoa and other aluminum producers, which include Century Aluminum and Norsk Hydro.

Century Aluminum’s (CENX) 3Q16 net loss widened despite sequentially higher aluminum prices. It generated an adjusted EBITDA of -$5 million in 3Q16.