Alcoa stock down on fears over aluminium price

Reuters reported that shares in aluminium producer Alcoa Inc fell nearly 3% on analyst fears that excess aluminium inventory might hold back a rally in the metal's price this year. In afternoon trading on the New York Stock Exchange, Alcoa stock was down 2.8% at USD 16.18, even though the aluminium price at USD 2,300 per tonne in London was up from USD 2,266. But analysts said that the price of the metal has been supported by financing deals which have tied up London Metal Exchange stocks. Standard Chartered said that "The recent rally can only be maintained as long as the huge amount of metal tied up within these deals is kept off the market." Mr Fraser Phillips MD of RBC Capital Markets' global mining research said that metal prices, which have rallied since the 2008 economic downturn, might not keep rising. Mr Phillips said that "Aluminium continues to labour under the weight of significant excess inventory and capacity and we expect aluminium prices to continue to suffer as a result, limiting any upside potential for the share price over the next 12 months." He said that he expected only modest improvement over the Q3, when Alcoa reports its Q4 earnings next Monday. The outlook now depends on Alcoa's ability to continue to meet its cost reduction targets on a timely basis and the aluminium market outlook. Mr Charles Bradford analyst said that he expected Alcoa's Q4 results to be disappointing not because of any underlying problems, but because of very high tax rates. (Sourced from Reuters)