Alcoa Stock in the Lens of Industry Indicators

Aluminum industry indicators

Alcoa (AA) closed at $34.48 on February 24, gaining 0.47% from the previous day’s close. It’s been a decent year for Alcoa so far, and the stock has gained 22.8% YTD (year-to-date). Primary aluminum peers Century Aluminum (CENX) and Norsk Hydro (NHYDY) have also seen upward price actions this year as investors seem to have discovered a lost love for metal stocks (XLB).

Alcoa’s split

On November 1, 2016, Alcoa split into two entities—Alcoa and Arconic (ARNC). Alcoa now houses the Legacy Upstream business and competes with other primary producers like Rio Tinto (RIO). The split completed a process that was initiated by the company in September 2015. The actual seeds of the split were planted almost a decade ago, when Alcoa started to expand its value-added portfolio

Since Alcoa is a pure-play commodity producer, its fortunes are closely tied to commodity prices. Notably, the sentiment in aluminum markets was subdued at the beginning of 2016. However, commodities, including aluminum, saw upward price action after Donald Trump won the US presidential election.

Series overview

In this series, we’ll look at some of the key industry indicators. We’ll look at commodity prices as well as demand-supply dynamics. It’s important to note that the demand-supply balance is a key driver of metal prices. By closely following demand and supply indicators, investors can get a better idea about the outlook for metals.