Alcoa Forecasts Aluminum Price Stability

Alcoa Inc. has used an aluminum price including benchmark futures and regional premiums that are similar to current levels for its 2015 free-cash flow forecast of $500 million, Chief Financial Officer William Oplinger said recently.

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In its fourth-quarter earnings call, Oplinger declined to say what aluminum price the company used for its 2015 projects, but said they were “similar to the market situation that we have today”.

That included the London Metal Exchange futures benchmark, regional premiums and currency effects.

His comments are likely to stir the debate over the direction of physical premiums, which are paid on top of futures for physical delivery and hit record levels.

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At CNY 12,770 ($2,065) per metric ton, the cash price of primary Chinese aluminum moved up 2.2% on Friday, January 16, making it the day’s biggest mover. After hitting a 30-day low of CNY 12,780 ($2,067) per metric ton on Wednesday, January 14, the price of Chinese aluminum bar rose 2.2% last Friday. After a 1.7% increase, Chinese aluminum scrap finished the day at CNY 12,100 ($1,957) per metric ton. The price of Chinese aluminum billet held steady at CNY 13,200 ($2,134) per metric ton.

The Indian aluminum cash price rose 1.3% to INR 112.10 ($1.81) per kilogram. At $1,782, the cash price of primary aluminum finished the market day on the LME up 0.9% per metric ton. On the LME, the 3-month price of aluminum gained 0.6% to finish at $1,793 per metric ton.

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