Alumina shares on rise despite Alcoa 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.
Frequently Asked Questions about this Article…
Alumina shares rose because investors responded positively to Alcoa's outlook for demand — Alcoa forecast about 7% growth in global aluminium demand this year, led by roughly a 10% increase from aerospace — and because spot alumina prices have remained relatively stable. Alumina also declared distributions for the quarter, which supported the share price.
Alcoa reported a second-quarter loss of US$119 million, compared with a US$2 million loss a year earlier. The result was partly driven by a near 7% fall in aluminium prices (to about US$2,237 a tonne) and a later drop in the London three‑month aluminium price to about US$1,803 a tonne; aluminium smelting also produced a US$32 million net loss.
Alumina holds a 40% stake in Alcoa World Alumina and Chemicals (AWAC), which is operated by Alcoa. AWAC includes refining and smelting businesses globally, including two aluminium smelters in Victoria.
Yes. The article says Alumina shareholders were to receive US$29 million in distributions and dividends for the quarter, with Alumina's income coming from whatever Alcoa allocates to it.
Alcoa forecast about 7% growth in global aluminium demand this year, with the aerospace sector expected to lead that growth at roughly a 10% increase.
Aluminium prices have been weak and fell nearly 7% at one point to roughly US$2,237 a tonne, with the London three‑month aluminium price down to about US$1,803 a tonne. By contrast, spot alumina prices — an important input for aluminium production — remained relatively stable according to Alumina's CEO.
Alcoa's alumina refining business and its arm that services aluminium products businesses were turning a profit, while aluminium smelting produced a US$32 million net loss in the quarter.
Alumina chief executive John Bevan said that improvements in productivity and costs have helped margins remain reasonably steady for alumina, despite a tough quarter for aluminium prices.
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