Alumina shares on rise despite Alcoa loss
Shares in Australia's Alumina have posted strong gains despite its giant aluminium producing partner Alcoa posting a large quarterly loss.
On Tuesday Alcoa, which has headquarters in the US, reported a second quarter loss of $US119 million ($131 million), compared with a loss of $US2 million a year earlier.
But Alumina investors appear to like Alcoa's forecast of 7 per cent growth in global aluminium demand this year, led by a roughly 10 per cent increase from aerospace, despite a global supply glut and continuing weak prices.
Alumina shares rose 3¢ to $1.03.
Alcoa made similar comments at its previous quarterly result in April, when it said the industry had turned around.
However, since then Alcoa has realised a near 7 per cent fall in the price of aluminium, to $US2237 a tonne, which contributed to the record $US119 million loss. On Tuesday the London three-month aluminium price was down to $US1803 a tonne.
Alumina, one of the ASX's top 100 companies, has a 40 per cent stake in the Alcoa-operated Alcoa World Alumina and Chemicals company that has refining and smelting businesses globally, including two aluminium smelters in Victoria.
Alumina, which gets its income from whatever Alcoa allocates it, said shareholders would receive $US29 million in distributions and dividends for the quarter. Alumina chief executive John Bevan said that while it was a tough quarter for aluminium prices, spot alumina prices - a key input in aluminium - had remained relatively stable.
Alcoa's alumina refining business is turning a profit, along with its arm which services aluminium products businesses, while aluminium smelting produced a $US32 million net loss.
"Improvements in productivity and costs have seen margins remain reasonably steady for alumina," Mr Bevan said.