Aluminum prices are falling. Nonetheless, Alcoa earning for the second quarter was $140 million, higher compared to last year's $138 million.
The company said that their three-month sales period rose 1 percent to $5.9 million, RTE has learned.
Despite seeing a drop of 8-9 percent (from 9-10 percent) from the aerospace industry, the largest aluminum-producing company in the United States adduced obtaining higher profits from providing sheets and plates to these sectors, including automotive.
The exchange prize and customer-paid premiums securing physical metal comprise the metal price, according to Alcoa. The premiums were up year by year in the United States, until recently, Pittsburgh Post-Gazette reported.
Jorge Vasquez, managing director at consultancy Harbor Intelligence in Austin, Texas, said that the rising imports with scarp supply and the new rules for commodity-exchange to make the metal deliveries to warehouses faster are the reasons for the decreasing premiums. He pointed that the existing fundamentals of the industry is degenerating.
"In quarter two, you had plummeting premiums and falling aluminum prices," Vasquez said.
In addition, China's exports are pointed as factors why there is a drop in aluminum prices. The company has forecasted an increase in aluminum surplus export this year because China is not cutting the much expected output.
Klaus Kleinfeld, Alcoa's Chief Executive Officer, called the semis shipments from China as fakes. He explained that they [China] produce and ship products, only to be re-melted by the end consumers into primary aluminum, just to avoid tax on exporting primary aluminum.
Kleinfeld said that China's over supply will reach 2.2 million tonnes this year from 1.8 million tonnes.
He was assured by the Chinese officials that the increase in exports was not part of their policy. The issue is currently being investigated, as per the report of Reuters.
The company is forecasting a growth of 6.5 percent for overall aluminum demand in 2015. However, Wall Street forecasters see that even if it exceeds the predictions, still it will not be enough to lift the Alcoa earnings from last year.
