Alcoa, Century Aluminum fall on analyst warnings

HARTFORD, Conn. (AP) -- Shares of two aluminum manufacturers fell Wednesday as an analyst downgraded Alcoa Inc., warning of weak industry fundamentals. Goldman Sachs analyst Sal Tharani cut the shares to "Neutral" from the firm's "Americas Buy List" after the stock topped his $13 target price last week. In a note to investors, he also recommended investors buy Freeport-McMoRan Copper & Gold Inc. on the relatively more attractive prospects of copper. Alcoa has gained 36 percent since being added to Goldman's "Americas Buy List" May 15, compared with an 8.8 percent gain in the Standard & Poor's 500 index. Aluminum inventories are at historically high levels, and sufficient excess aluminum capacity around the world could be brought online and cap rising aluminum prices, Tharani said. The result is little evidence of anything that could boost the Pittsburgh-based company's stock beyond $13 and several factors that could drag it down, Tharani said. In addition, he said that as the world economy recovers, different supply and demand issues related to aluminum and copper will become more apparent "and set the stage for a period of differentiated performance among the base metals with copper leading, aluminum lagging and the correlation among the metals breaking down." Copper is the best positioned among base metals as rising demand and "constrained supply" could potentially result in rising prices, Tharani said. Alcoa fell 54 cents, or 4.2 percent, to $12.37 in morning trading. Century Aluminum Co. dropped 31 cents, or 2.7 percent, to $11.23 and Freeport-McMoRan Copper & Gold rose 92 cents to $60.39.