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Nomura Says Aluminum Rally Is Overdone

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Alcoa (NYSE: AA) shares trended down Thursday after one analyst said the worldwide aluminum market has slipped into an oversupply that will persist into 2015.

Alcoa shares are up more than 50 percent year to date, hit a high of $17.22 last month, but has been in retreat in recent days.

Nomura's Curt Woodworth said oversupply of the metal is causing weakness in spot prices which is also seen persisting into next year.

"Aluminum's recent rally has been overdone," Woodworth said in a note Thursday, adding that he expects the metal will retreat to $0.82 per pound. The price recently crossed $0.91 per pound or $2,000 per metric ton.

Investors have been buying up aluminum and storing it in warehouses that aren't registered with the London Metals Exchange and Woodworth sees a risk to prices if these stocks enter the market. Woodworth may be a contrarian, however.

London-based mining company Rio Tinto said earlier Wednesday its first-half profit more than doubled, partly on its aluminum and copper output.

JP Morgan sees a shortage of aluminum this year totaling 439,000 metric tons and expects prices to increase next year by 12 percent.

Shares of Alcoa traded recently at $16.10, down 2.06 percent.

Latest Ratings for AA

Oct 2016Deutsche BankMaintainsBuy
Oct 2016Bank of AmericaDowngradesBuyNeutral
Oct 2016Goldman SachsMaintainsNeutral

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Posted-In: Curt Woodworth JP Morgan NomuraAnalyst Color Analyst Ratings


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