Nomura Analyst Says Aluminum Rally Overdone

Alcoa Inc.

shares trended down Thursday after an analyst said the worldwide aluminum market has slipped into an oversupply that will persist into 2015. Alcoa shares are up more than 50 percent in the year to date, hit a high of $17.22 a share 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 a pound. The price recently crossed $0.91 cents a 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. But Woodworth may be a contrarian. London-based mining concern Rio Tinto said earlier Wednesday its first-half profit more than doubled, partly on its aluminum and copper output. J.P. Morgan sees a shortage of aluminum this year totaling 439,000 metric tons and expects prices to increase next year by 12 percent.