The primary metals division produces primary aluminum used by Alcoa's fabricating businesses, and it is sold to external customers, aluminum traders and on commodity markets. While our analysis shows that it was Alcoa's most valuable division in terms of contributor to shareholder's income, we have further increased our estimates for the overall value of the division going forward.
Aluminum prices have increased over the last two years since their sudden decline from peak prices in mid-2008. The 13% increase in global aluminum prices in 2010 has been directly responsible for the observed increase in the division's revenue.
With demand for aluminum predicted to increase from 10-15% in developing countries like China, South Korea, Thailand and India, Alcoa's estimate of a 12% growth rate for 2011 is well justified. We believe that the demand growth will increase Alcoa's revenue per ton of aluminum sold to as high as $3,400 in coming years from its current value of about $2,500.
Note：
Alcoa（AA） is the world leader in the production and management of primary aluminum, fabricated aluminum and alumina. The company has a significant presence in all segments of the aluminum industry and operates in more than 31 countries worldwide. The company competes with other international metals and mining giants like Rusal, Rio Tinto（RTP）, BHP Billiton（BHP） and Chalco（ACH）.
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