January 23, 2025 at 02:26PM
Shares of Alcoa are down 1.3% in the pre-market following earnings, largely due to execution challenges but the company paints an solid global demand picture for the industrial economy.
Revenues rose 34.3% in the year so some strength is backward looking but going forward, the conference call highlighted ongoing resilience.
“Global aluminum demand remained resilient in the fourth quarter. European and North American demand continues to be supported by the packaging and electrical sectors,” said William Oplinger, Alcoa Corporation President and Chief Executive Officer. “Aluminum demand outside China is expected to rebound, with North America and Europe supported by higher real incomes and lower average interest rates year-over-year.”
In bauxite, they noted all-time high prices and in alumina, they highlighted a tight market.
“In alumina, prices reached an all-time high in the fourth quarter as a result of a tight market on lower-than-expected supply… Demand remained strong from smelters, resulting in low stocks available in the alumina spot market, creating competition for alumina cargoes.”
In terms of sectors, here is where they see strength:
“We continue to see demand strength in packaging and electrical conductor and electrical distribution,” Oplinger said.
In terms of China, he notes that it’s running into capacity constraints and has seen good demand growth, despite the poor commentary on China’s economy.
“China saw growth in all end uses except building construction, which led to strong primary aluminum demand growth in 2024,” he said.
In the US, he was upbeat on transports.
“In the U.S., transportation and automotive markets are showing signs of recovery, supported by real income growth and economic stabilization,” he said.
Finally, Oplinger highlighted the problems with potential tariffs on Canada, which is a large aluminum exporter to the USA.
“If there were to be tariffs on Canadian aluminum imports to the U.S., this would represent a threat to U.S. industrial competitiveness… Trade flows would likely be impacted such that U.S. aluminum imports would increase from countries like the Middle East and India.”
This article was written by Adam Button at www.forexlive.com.
