Alcoa Inc. (NYSE:AA) turns bearish
Alcoa Inc. (NYSE:AA) presents a positive picture with reduced costs, boosted productivity, expanded profitable businesses and shuttered high cost smelting capacity. However, things are not so bright in the aluminium sector as the prices are continuously declining in the market. This had weakened the bright prospects of shares of Alcoa Inc. (NYSE:AA) to move bearish. The credit rating given to the player in the aluminium industry had been downgraded owing to such fundamental reasons.
Alcoa Inc. (NYSE:AA) is primarily engaged in the production, marketing and sales of primary aluminium, fabricated aluminium and combined alumina. The company markets and sells its products to worldwide markets for use in packaging, building and construction, airlines, automobiles, oil and gas equipments, defense industries and the like. Alcoa Inc. (NYSE:AA) operates its business in 31 countries through four major segments namely Alumina, Flat Rolled Products, Engineered Products and Solutions and Primary Metals.
The Moody’s Rating given to Alcoa Inc. (NYSE:AA) had been downgraded from Baa3 to Ba1 owing to falling aluminium prices taking a toll on the near future growth of the company. The drop in prices had primarily been caused due to the increase in global production and due to fall in demand for aluminium in the key metal consumer economies such as China. A close observation at the company’s operations would reveal that the engineering products division of Alcoa Inc. (NYSE:AA) had generated greater revenues over the years compared to the upstream businesses of the company.
Another major player in the aluminium sector hit by the falling prices at the global markets is the Kaiser Aluminum Corp (NASDAQ:KALU). The company is primarily engaged in the manufacturing and sales of semi fabricated specialty aluminium products. Kaiser Aluminum Corp (NASDAQ:KALU) operates its businesses through one major segment namely the Fabricated Products Division. Further, the company also operates three other business units such as Secondary Aluminium, Hedging and Corporate and Others. Kaiser Aluminum Corp (NASDAQ:KALU) is also affected due to the declining prices of aluminium as a result of increasing global production and declining use in metal consumer economies.