Aluminum prices are at a low right now as investors worry about a weak US economy and a possible European recession negatively affecting the global industry. With aluminum being used in many different industries across the market weak aluminum prices could reflect broader economic troubles ahead. The Paragon Report examines investing opportunities in the Aluminum industry and provides equity research on Alcoa Inc and Century Aluminum Company. Access to the full company reports can be found at:
Aluminum prices have fallen approximately 10% this year amid concerns that the global economic slowdown may cut demand for raw materials. While that number may be alarming, ten percent is the smallest drop among the six industrial metals traded on the London Metal Exchange.
Aluminum has been taking on a bigger role in electronics products as designers have started to use more environmentally friendly materials. Industry experts explain that the metal is easily recycled with no loss in quality. Moreover, the push by automotive and aerospace companies to create lighter and consequently more fuel efficient vehicles has also helped to bolster demand for lightweight aluminum. Alcoa spokesman Kevin Lowery said Aluminum's density is one third that of steel.
Alcoa announced that Q3 net income rose to USD 172 million or 15 cents a share from USD 61 million or 6 cents, a year earlier. Sales increased 21% to USD 6.4 billion beating the USD 6.23 average of nine analyst estimates.
Mr Klaus Kleinfeld chairman and CEO of Alcoa said that he sees stable prices in the near future for the raw materials used in making aluminum. Mr Kleinfeld is blaming falling aluminum prices on negative bets from the financial industry.
Century Aluminum reported a net loss of USD 6.6 million for the Q3 of 2011. Financial results were positively impacted by a mark to market gain on forward contracts of USD 4.2 million related primarily to aluminum put options. Cost of sales for the quarter included a USD 13.5 million charge for lower of cost or market inventory adjustments.
