Daily Archives: January 5, 2012

Alcoa announces cutbacks… but how much?

Written by Paul Adkins

Yesterday Alcoa announced that they would curtail or close 531,000t of annual capacity, being 12% of their total.   The announcement was well covered by the world’s financial and business press, but poorly analysed.

The announcement did not specify which plants would suffer the cuts, save the two plants which are already in mothballs.   Alcoa’s announcement mentioned only that potlines in Texas and Tennessee would be permanently closed.

The announcement went on to say that further announcements of cuts would be forthcoming in the near future.   But that just leaves a sword of uncertainty over the necks of thousands of Alcoa staffers.   A great way to start the new year, not knowing if you will have a job or not.

I don’t have the numbers on how much capacity was under wraps at the two plants that are now closing permanently, so I can’t calculate how much metal is really affected by this announcement.    But it’s probably something like half what was announced.   It’s no surprise therefore that Alcoa’s price and the metal price did not have much of a reaction to the announcement.