AP quoted Moody's Investors Service confirmed aluminum maker Alcoa Inc's Baa3 rating saying that earnings should improve on cost cutting and moderate improvements in the aluminum industry.

But the ratings agency also gave the company a negative outlook because of factors like high inventories and the possibility of a correction in aluminum prices.

Moody's wrote that the meaningful level of cost savings at Alcoa and larger market forces should lead to improving results at Alcoa's 4 business units. Moody's also wrote that Alcoa has a strong market position and competitive cost position in bauxite and alumina. That should help it when worldwide aluminum demand recovers.

Moody's said that improvements in some of those industries, such as autos, should help Alcoa's profits in 2010. But the negative outlook reflects the uneven pace of recovery in some important aluminum markets and the possibility of a price drop.

It said that while the company has laid the groundwork for its primary metals segment to return to a more cost competitive position than evidenced in recent years, improvement in market demand and volume remain critical to achieving this potential in full.

(Sourced from Associated Press)