- Alcoa (AA -5.1%) plunges after announcing plans to restart poduction at its idled Alumar smelter in Brazil, extending losses following a three-year high set last week.
- Aluminum prices have nearly doubled over the past 18 months, and Bloomberg sees Alcoa's decision as one of the first signs that the massive rally is finally bringing more capacity on line.
- ETFs: JJU, JJUC
- "The aluminum market remains tight, with metal availability scarce on the back of Chinese production cuts, port delays and shipping issues," BMO analyst Colin Hamilton says, expecting the "ongoing price rally to stimulate capacity increases, the first of which was seen yesterday with Alcoa announcing the restart."
- Alcoa estimates the cost of the restart at ~$75M, with $0.05-$0.07 expected expense in Q4.
- Alumar represents a tiny fraction of global aluminum production, which researcher Harbor Intelligence forecasts will total ~70M tons in 2022.
- London aluminum prices hit $3K/ton last week for the first time in more than a decade on supply issues.