Aluminum up After Alcoa’s Net Loss; Fitch and Moody’s Downgrade

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Aluminum giant Alcoa reported a quarterly loss due to heavy restructuring expenses  last week after it shut smelters and rolling mills in response to low aluminum prices. Alcoa said on Tuesday it lost $178 million for the first quarter ending March 31, compared with a profit of $149 million in the year-ago period.

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Alcoa will likely recover from the restructuring, but more concerning is that both Fitch Ratings and Moody’s Investors Service cut its rating to junk status in the wake of the report. Fitch told Bloomberg News that this year and next it expects Alcoa’s profit to continue to reflect weakness in the price of aluminum, as its debt-to-Ebitda ratio rises to as much as 2.9.

The aluminum cash price saw the biggest increase at 3.5 percent on the LME, finishing at $1,853 per metric ton for Friday, April 11. The 3-month price of aluminum jumped 3.3 percent on the LME to finish at $1,882 per metric ton. The Indian aluminum cash price rose 2.8 percent to INR 115.40 ($1.91) per kilogram. Today marked the fifth in a row of increasing prices and the improvement has accelerated since Monday, April 7.

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Chinese aluminum closed mixed last Friday. The Chinese aluminum cash price gained 1.1 percent to finish at CNY 12,900 ($2,076) per metric ton. The price of Chinese aluminum scrap remained essentially flat at CNY 12,250 ($1,972) per metric ton. For the fifth consecutive day, the price of Chinese aluminum billet held flat at CNY 13,590 ($2,187) per metric ton. The price of Chinese aluminum bar was unchanged at CNY 14,200 ($2,286) per metric ton.

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