A Citigroup analyst late Wednesday upgraded aluminium producers Alcoa Inc. and Alcan Inc., saying aluminium prices are on the rise and making aluminium is becoming more profitable.
Citigroup analyst John Hill upgraded Alcoa and Alcan to "Buy" from "Hold." He said aluminium prices have lagged prices for other metals like gold and silver for years, but that gap is narrowing.
"We find the aluminium situation is brightening, with prices ticking higher after badly lagging other nonferrous metals during the powerful up-leg of the commodity supercycle," he wrote in a research repot.
Demand for aluminium, used to make things like cars, planes and some packaging, is durable, he said. Inventories are stable and the threat that Chinese aluminium makers are going to pull down prices is overstated, he said.
Shares of Alcoa, a New York-based aluminium producer with $30.38 billion in sales last year, rose 30 cents to $32.45 in premarket trading Thursday after closing the New York Stock Exchange Wednesday at $32.15.
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