1.Even a slight increase in volume coming from the restart of smelters and the entrance of new competitors could limit the potential price increase of aluminum over the coming years.

2.The prospects for more expansionary projects remains limited as competition increases for the few bauxite rich areas in the world and or the possibility of eroding returns.

3.Alcoa’s balance sheet is highly leveraged. It holds a largely unfunded pension, substantial healthcare liabilities, and has a large dependence on financial markets for funding needs.

4.Alcoa has consistently struggled in managing energy costs as well as unfavorable currency movements that affects earnings.

5.The firm is heavily reliant on industries such as the construction and aerospace. As well, Alcoa depends on China as whole for its continued demand on aluminum to hold up prices in the market.

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Summary:

We have no official buy or sell position on Alcoa (AA) but heavily encourage a positive discussion to see all points of view be they bullish, bearish, and or something else.