Alcoa to Show If It Has Picked Up Metal's Shine .

Aluminum is finally coming to the metals party, albeit a little late.

With the metal's price up 14.5% since this time last year, Alcoa will be the first metals maker to show the benefit as it kicks off the first-quarter earnings season after the closing bell Monday. Analysts polled by FactSet expect Alcoa to earn 27 cents a share for the quarter ended March, a turnaround from its 19-cent loss a year earlier. The first quarter should also outshine the 24 cents a share the Pittsburgh-based company made in the fourth quarter of 2010. Stronger automobile, aerospace, energy and electronics sales world-wide are fueling the rebound

That is helping to correct a longstanding oversupply of aluminum production. Last year, global production of aluminum of 41 million metric tons was only one million above global demand, according to the World Bureau of Metal Statistics. Svein Richard Brandtzaeg, chief executive officer of Norwegian aluminum maker Norsk Hydro ASA, last week said he saw a real chance for demand to overtake supply this year.

Given the two- to three-month lag between higher market prices and the impact on Alcoa's bottom line, the second quarter looks as though it will be another strong one for the metals giant. It is no surprise that Alcoa's stock has lately been trading near its 52-week high.

Still, there are nagging concerns both about the aluminum market and Alcoa's place in it. For one thing, the relative ease with which new aluminum supply can come online could quickly damp the rally. Alcoa, for instance, is operating at only 88% capacity.

Moreover, analysts have predicted that aluminum will become a replacement metal for copper—especially if copper prices continue their climb into the stratosphere. Yet that shift has so far failed to materialize.

Alcoa, meanwhile, is hampered by relatively high costs. About half of the world's aluminum makers, including Rio Tinto's aluminum division and Russia's UC Rusal, can currently produce the metal more cheaply. Alcoa hasn't made the most of its opportunity with alumina, the key ingredient needed to make aluminum that it produces more cheaply than about two-thirds of its peers.

The macro environment may be working in Alcoa's favor. But without a marked improvement in cost control, Alcoa shareholders won't get full benefit.