Analysts revise Alcoa forecasts downward

Jul 05, 2012 | 03:02 PM | Suzy Waite

Tags  Alcoa, Standard & Poor's, Davenport & Co, Dahlman Rose, Very Independent Research, Leo Larkin, Tim Hayes, John Tumazos London Metal Exchange

NEW YORK — A 12-percent drop in the price of aluminum in the second quarter may pressure Alcoa Inc.’s earnings when the producer makes its quarterly report next week, industry analysts say.

A number of analysts have lowered their forecasts ahead of Alcoa’s July 9 quarterly report, anticipating the Pittsburgh-based company will kick off the earnings season with lower-than-expected results as the price of aluminum on the London Metal Exchange continues to deflate due to global uncertainty.

Although Alcoa’s downstream businesses likely had a strong quarter, the plunging primary price will nevertheless have a negative impact on earnings, analysts forecasted.

The cash aluminum contract averaged $1,884.50 per tonne in June, well below monthly averages of nearly $2,200 a tonne in the first quarter. Although prices have shown signs of a rebound recently, with three-month aluminum closing at $1,948 per tonne on Thursday, up from $1,902 per tonne on Monday, it is still down some 17 percent from this year’s high of $2,349 per tonne logged in late February.....