Alcoa Inc. (AA) said it will review 460,000 metric tons of smelting capacity over the next 15 months for possible cuts, as the world's largest aluminum maker by revenue looks to respond to slumping aluminum prices.
"Because of persistent weakness in global aluminum prices, we need to review every option to maintain Alcoa's competitiveness," said Chris Ayers, president of Alcoa's Global Primary Products.
The possible curtailment could affect 11% of Alcoa's global smelting capacity. The company already has 13%, or 568,000 metric tons, of smelting capacity idle.
Alcoa said its review will include facilities across the Alcoa system and focus on higher-cost plants, as well as plants that have long-term risk due to issues such as energy costs or regulatory uncertainty.
Alcoa said its actions could range from discontinuing pot relining to full plant curtailments and permanent shutdowns. Decisions on curtailments or closures will be announced as reviews are completed, the company said.
Alcoa has suffered from flagging raw aluminum prices, as a glut of the commodity has persisted despite Alcoa's moves to cut production. The company has moved to fatten its portfolio of products like screws, bolts, and other high-value parts for planes and cars in order to bolster its profit margins.
Speculators are busy shorting aluminum, part of a wide selloff in commodities, causing turmoil in the broader mining and metals sector.
Last month, the company said its first-quarter profit rose on one-time benefits, despite weaker aluminum prices.
Shares were down 2% at $8.33. The stock is down 4% so far this year.
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