Alcoa Inc. (NYSE: AA) facing the slowing demand for aluminum

The largest aluminum producer in the US, Alcoa Inc. (NYSE: AA, AA message board) recently revealed that the company has cut aluminum production by 20% since last fall. Because of the slowing demand for aluminum, distributors are willing to first get rid of their inventories and stockpiles rather than continuously buy more. Alcoa expressed no concern about the situation possibly hurting the company's future performance. Klaus Kleinfeld, President and CEO, stated there are no plans to increase production any time soon. The overall strategy for Alcoa is to withstand the slow period and count on government stimulus programs to boost demand in the future. According to the announcement, the company sees no apparent need for a production increase at the moment. Aluminum prices went down 60% over the past half year and have been lagging against prices of other exchange-traded metals like copper. Alcoa is currently targeting China's growing demand for aluminum. The market niche looks accessible because of the ongoing government stimulus programs and increased aluminum usage as replacement for copper in wires. The company's stock price wasn't affected by the fact that they decided to remain in a decreased productivity mode. Looking forward, even if global aluminum demand remains weak, there should be market niches emerging, which the company is likely to get a hold off because of their size, influence and well developed business model. Reference: http://www.alcoa.com/