The aluminum giant returned strong
Aug 22, 2017

This year, as basic metals and other commodities prices continue to rise, overseas resource share prices also rose together. Recently, the aluminum prices in the strong push, Alcoa, Rusal and other giants to better performance, two company stock prices rose significantly, the cumulative increase this year, respectively, 31% and 64%.

Resource stocks favored

This year, a variety of basic metal prices rose significantly, becoming the main reason for boosting overseas resource stocks. Data shows, this year LME3 month aluminum price has risen 22.59%, LME3 month copper prices rose a total of 18.51%, LME3 months zinc price has risen 22.2%, LME3 months nickel price has risen 12.18%, LME3 months lead price has risen 18.45%.

In the near future, overseas aluminum stocks have performed well, and Rusal's outstanding performance in recent trading days has led to a cumulative increase of more than 60% this year. In addition, Alcoa has increased by more than 30% so far.

According to the world Bureau of metal statistics report, 1-6 months, the global supply of raw aluminum market shortage of 1 million 74 thousand tons. Analysts pointed out that China's aluminum production capacity of large countries, and the current supply side under the reform of regulation, production capacity continued to decrease, it is expected that the short-term vacancy is difficult to fill. In the case of demand is not weakened, the aluminum price trend is still good for the future.

Huatai futures believe that aluminum prices are weak fundamentals and strong policy side of the game, high shock intensity. Although the current supply reduction is not obvious, the downstream demand is poor, trading decline, the stock is still in the process of recovery, making the spot aluminum price pressure. But the supply side reform is expected to make late production of large probability will be gradually implemented, the stock is expected to reduce the pressure to increase, supporting the latter aluminum prices.

Gradually improve the performance of Alcoa

For the recent outstanding performance of aluminum stocks, its latest results quite promising. A case study of Alcoa Corp, the day before the announced results for the second quarter of 2017. In spite of the decline in alumina prices, Alcoa has maintained a solid profitability, with its shipments and cash balances increasing. Specific data show that in the two quarter of 2017, the company's net income was $75 million, excluding special items, its net income was $116 million. Profits before interest, taxes, depreciation and amortization (excluding special items) are $483 million ($). Revenue of $2 billion 900 million, an increase of 8%.

Alcoa Inc president and CEO Roy Harvey said: "Alcoa created solid earnings in the second quarter, strong cash flow, cash balance growth has exceeded $950 million. In the first half of this year, our adjusted EBITDA reached $1 billion, and despite the high cost of inputs, we are still expected to continue to improve in the second half. The adjusted EBITDA (excluding special items) is expected to reach about $21-22 in 2017. We are seeking to adopt a simple strategic priority programme that will continue to benefit shareholders in order to reduce complexity, increase returns and strengthen our balance sheet."

In July 11, 2017, Alcoa (Alcoa) announced that it would restart three of its five electrolytic cells at its Warrick smelter in Indiana for the company's joint steel plant. The process is expected to end in the second quarter of 2018. The restart will allow Alcoa to have about 886 thousand tons of idle refining in the total refining capacity of 3 million 400 thousand tonnes. To increase the utilization rate of the comprehensive capacity based on the assets, the company decided the smelter will directly to the factory of metal smelting, followed by aluminum foil growth will be used for packaging packaging industry for food and beverage cans.

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