NEW YORK, Jan 7 （Reuters） - Aluminum maker Alcoa Inc （AA.N: Quote） plans to restart three idled aluminum smelters in the United States in the first half of 2011, raising its output in a bullish bet on the economy and to meet growing global demand.
The move was seen as a confident signal by many on Wall Street, where investors have sent Alcoa shares up 53 percent in the past six months. It is also a positive sign ahead of the company's quarterly earnings, due on Monday.
The restarted facilities will increase Alcoas aluminum production by 137,000 metric tons over the course of 2011 and by 200,000 metric tons on an annual basis thereafter.
Charles Bradford, analyst at Affiliated Research Group, said Alcoa's plan was less a sign of U.S. economic health than it was of a global upturn driven by China and other developing countries that has lifted aluminum prices to two-year highs.
Aluminum is a building block for many products, including cars, airplanes and cans. Demand for it, or lack thereof, is widely seen as a read on the global economy.
"I don't think Alcoa would have brought the smelters back if they didn't think they could sell the material," Desjardins Securities analyst John Redstone said. "I think it's a very positive sign for the aluminum market."
Shares of the Pittsburgh-based company were down 4 cents, or 0.24 percent, at $16.32 in afternoon trading on the New York Stock Exchange.
TO CREATE 260 NEW JOBS
Alcoa said the plants it would restart were the Massena East facility in Massena, New York; Wenatchee Works in Malaga, Washington; and Intalco in Ferndale, Washington. The restarts will create about 260 new jobs through recalls and hiring.
Once the plants fire up, Alcoa will still have 674,000 metric tons of idle capacity. The company was on course to produce more than 3.5 million metric tons of aluminum in 2010.
Affiliated's Bradford said Alcoa's expansion in its home market, even if small relative to the rest of the company, indicated it was conscious of the high costs it faced in strong-currency countries where it operates, such as Brazil, Australia and Canada.
The company said it was able to sign long-term power supply contracts for the Wanatchee and Massena plants that put energy prices there at 40 percent below worldwide averages. The Italco plant is operating under its current 17-month contract.
While Alcoa's production increase does boost global supply, the company will be able to make the material at a lower cost than competitors in China. Electricity costs in China are extremely high, and aluminum production is an energy-intense process.
"It makes more sense for Alcoa to bring these plants online, and force production in China to shut down," Morningstar analyst Bridget Freas said.
Alcoa idled production and cut jobs when the global economy slumped, and it has since implemented cost cuts that should drive its profits higher this year, analysts have said.
Aluminum prices increased 5 percent in the fourth quarter, and are now trading at a two-year peak of $2,500 per tonne.
Alcoa's Norwegian rival, Norsk Hydro （NHY.OL: Quote）, said it would not restart aluminum smelters it has idled, reducing concerns that supply could suddenly balloon and force down prices. [ID:nOSN004924] （Additional reporting by Matt Daily, Braden Reddall and Christopher Kelly; Editing by Derek Caney and Bernard Orr）
豫公网安备41010502003434号