Alcoa Inc. (AA - Analyst Report) predicts that the global consumption and supply of aluminum could double by the year 2020 from its 2010 figures, driven by an increasing demand for more efficient infrastructure and transportation solutions.
Alcoa forecasts a compound average growth rate of 6.5% in aluminum demand, representing an increase in annual demand for bauxite from 214 million tonnes to 400 million tons. Alumina is expected to grow from 82 million tonnes to 156 million tons in a year, and aluminum growth would be from 39 million tons to 73 million tons per year.
Alcoa also introduced an architectural panel that cleans itself and the air around it. The aluminum panel has a titanium dioxide coating that, when combined with sunlight, acts as a catalyst to break down pollutants such as smog into harmless substance that rain washes away.
Alcoa, a Pennsylvania-based corporation, is among the world’s leading producers of primary and fabricated aluminum and alumina. It involves the technology of mining, refining, smelting, fabricating and recycling of aluminum. We believe that Alcoa’s cost reduction efforts are, to some extent, offsetting the negative impact of higher energy and raw material costs on profitability.
The company is divesting underperforming assets through its restructuring program. The annual global consumption of aluminum products, both upstream and downstream, is expected to double over the next 15 years. This consumption boom will be driven primarily by growth in China, India, Russia and Brazil, whose demographics are accelerating development.
Alcoa faces stiff competition from Aluminum Corporation Of China Limited (ACH - Analyst Report), Rio Tinto plc. (RIO - Analyst Report) and BHP Billiton Ltd.
Currently, Alcoa has a short-term (1 to 3 months) Zacks #3 Rank (Hold) and a long-term (6 months) Neutral recommendation.
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