Alumina soars despite Alcoa loss
US-headquartered Alcoa on Tuesday 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 added 3¢ to $1.03.
Alcoa made similar comments at its previous quarterly result in April, when it said the industry had turned around.
But 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 (AWAC) company that has refining and smelting businesses globally, including two high-employing 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, bringing the total for the year to $US54 million.
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, 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 on Tuesday. AAP
Frequently Asked Questions about this Article…
Alumina shares climbed because investors focused on Alcoa's forecast of 7% growth in global aluminium demand this year (with about a 10% rise from aerospace), and on stable spot alumina prices. Despite Alcoa reporting a US$119 million quarterly loss, Alumina benefits from demand outlook and its 40% stake in Alcoa World Alumina and Chemicals (AWAC).
Alcoa reported a second-quarter loss of US$119 million (about A$131 million), compared with a loss of US$2 million in the same quarter a year earlier.
Alcoa forecasted 7% growth in global aluminium demand this year, led by roughly a 10% increase in demand from the aerospace sector.
Alumina receives income based on what Alcoa allocates from the Alcoa-operated AWAC business. For the quarter Alumina said shareholders would receive US$29 million in distributions and dividends, bringing the total for the year to US$54 million.
Alcoa experienced a near 7% fall in the aluminium price to about US$2,237 per tonne, contributing to the record US$119 million loss. The London three-month aluminium price was reported at US$1,803 per tonne on the day of the article.
Yes. Alumina’s CEO John Bevan said that while it was a tough quarter for aluminium prices, spot alumina prices — the key input for aluminium production — had remained relatively stable, which helped refine AWAC’s margins.
According to the report, Alcoa’s alumina refining business was turning a profit, while aluminium smelting produced a US$32 million net loss during the quarter.
Alumina’s CEO pointed to improvements in productivity and cost control as reasons margins have remained reasonably steady for alumina, even amid a global supply glut and continuing weak aluminium prices.
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