Alcoa (AA) Leads Wall Street Higher

Expectations have been lowered so much heading into the earnings season, that any results that meet or beat them will give a boost to the market, as the quarterly earnings of Alcoa (NYSE: AA) did on Tuesday. The Dow closed at 13,390.51, up 61.66, or 0.46 percent. The S&P 500 and Nasdaq also closed in positive territory on Wednesday.

Investors are looking to revenue as one of the key indicators of the economic health for the fourth quarter, and Alcoa outperformed in that regard, which the market responded to in a soothing manner. If there is more good news from important companies, the market could jump to significant levels because the bar has been set so low.

There is no doubt the next weeks will experience a lot of ups and downs as investors appear to be trading on news at this time, rather than the overall health of the economy and individual company performance.

So when some companies report better-than-expected results, the overall market is benefiting from it. That's nothing new in and of itself, but it seems to be more intertwined than usual.

Also important is the outlook the companies of give heading into 2013. For Alcoa, the assertion that they see global demand for aluminum rising in 2013 helped to create the positive atmosphere that pushed the markets up overall.

Since expectations are so low, even some average performances could have a positive effect on markets, which could move them up to levels not reflecting the reality of the situation.

The bottom line is markets will probably perform better than the gloomy fog recently surrounding it has signaled, although it could set things up for a plunge after the earnings season is over and investors digest the news.

Alcoa (NYSE:AA) Down on Mixed Economic Data

Ongoing release of mixed economic data has companies like Alcoa (NYSE:AA) being left with little or no direction, although investors and shareholders are starting to see and believe there will be a long stretch of economic weakness infecting the sector, even with estimated price and demand increases for aluminum.

The latest government data show business investment is expected to slow down, while the anticipated resumption of quantitative easing, which is strongly opposed in many quarters, will be incremental rather than all at one time, probably to lessen the opposition to the practice, which would grab hold of huge numbers and blast them if done all at once.

Also pushing down the share price of Alcoa is the strengthening of the U.S. dollar, which also put downward pressure on metal prices in general.

The aluminum giant dropped to $12.62, losing $0.25, or 1.94 percent as of 12:39 PM EDT.

Alcoa (NYSE:AA) Appoints New VP Finance for North American Rolled Products

Alcoa (NYSE:AA) has named Matthew Garth as the new vice president of finance for North American Rolled Products.

Replacing Garth in his former role as director of investor relations will be Roy Harvey, who was Alcoa's director of corporate treasury.

Alcoa Chief Financial Officer Chuck McLane in a statement: “Matt and Roy bring solid financial experience and talent to their roles. Matt’s strategic background and capital market experience will be a valuable addition to Rolled Products, and Roy’s unique international operational experience will be an asset in working with the financial analyst community.”

The rolled products group entails the North American Mill Products and Rigid Packaging operations unit.

Rigid Packaging has plants in Alcoa, Tennessee and Warrick, Indiana. Mill Products has plants in Davenport, Iowa and Lancaster, Pennsylvania.

BHP (NYSE:BHP), Teck (NYSE:TCK), Freeport (NYSE:FCX) and Rio Tinto (NYSE:RIO) Will Soar on Quantitative Easing

With the Federal Reserve poised to inflate via quantitative easing, a number of commodities will surge in price, which will strongly benefit diversified miners like BHP Billiton (NYSE:BHP), Teck Resources (NYSE:TCK), Freeport McMoran (NYSE:FCX) and Rio Tinto (NYSE:RIO).

According to UBS (NYSE:UBS), some of their top commodity picks include gold, copper, palladium, iron ore, thermal coal and zinc. They added they believe it's a "game changer" for commodities.

Talking on global capital flows, UBS said that should strengthen "credit creation in emerging markets." The giant bank concluded, "We believe that QE2 will prolong the bull market in commodities."

UBS' top pick in the commodity sector is palladium, which they see making significant gains through 2015.

In what could be troubling news for aluminum producers like Alcoa (NYSE:AA), UBS sees aluminum and nickel, among other commodities whose supply has little constraint upon them as being less desirable and affected by quantitative easing.

Gold of course will continue to perform strongly for some time to come. In that space, besides companies mentioned above, they like gold mining giant Barrick Gold (NYSE:ABX).

UBS said they like gold mining stocks over ownership of physical gold.

Rio Tinto (NYSE:RIO) Beats Analysts' Iron Ore Estimates

Rio Tinto (NYSE:RIO) reported it surpassed analysts' expectations for iron ore production in the third quarter, breaking its own quarter record in the segment, while also breaking quarterly production records for coking coal and alumina.

Iron ore production was up 10 percent, alumina 6 percent and coking coal 17 percent. Another metal gaining significantly was bauxite, which gained 17 percent in the same period.

The company said: "This quarter we achieved record production in iron ore, alumina and coking coal. Our investment in organic growth is gathering momentum. We approved more than $4 billion of capital projects during the third quarter, including investment towards the expansion of our Pilbara iron ore operations to 330 million tons per annum. This takes our total approvals this year to $5.5 billion and is consistent with our capex guidance of $13 billion over the 18 months to December 2011."

The bad news for the company was gold and copper production was down at a time when prices for both metals have been skyrocketing. Copper was down 19 percent and gold 33 percent in the third quarter.

Also slightly down was aluminum production, dropping 2 percent, and thermal coal production in Australia, which fell 14 percent.

Alcoa (NYSE:AA) Can't Do Much But Hope and Wait

Alcoa (NYSE:AA) has done the things it needed to do to keep the company healthy, especially cutting costs throughout the recession.

But with the recession continue to batter the U.S. economy, and manufacturing down, there's very little in the near term Alcoa management can do, except to wait and hope.

It's all about aluminum demand and pricing for Alcoa, and in the near term nothing stands that changes the reality that demand will continue to remain down, along with prices.

Alcoa is scheduled to announce third-quarter earnings on October 7, and analysts don't see anything happening there that will change the outlook.

Expectations are they will generate a small profit for the quarter. Possibly around 6 cents a share.

All Alcoa can do now is wait for aluminum prices to go up significantly. So will shareholders in the company.

Alcoa (NYSE:AA) Continues Upward Climb

Alcoa (NYSE:AA) has drawn a lot of interest over the last couple of days, after moving up close to 5 percent yesterday, and up another 2.5 percent today.

Volume has been strong, already surpassing its 3-month average at 1:40 PM EDT.

There is no known reason Alcoa is moving up, as aluminum prices have remained at about their six-week high.

Alcoa has done a good job of cutting costs, but that is already been factored into the price.

Even so, analysts like the stock over recent months, and it may be based on the probability it may have hit its low and has nowhere to go but up.

But with Alcoa going as aluminum demand and prices go, there's nothing on that end which explain this upswing.

Alcoa closed Wednesday at $11.70, gaining $0.53, or 4.7 percent. There were at $11.97, up $0.27, or 2.26 percent, at 1:44 PM EDT.

Alcoa (NYSE:AA) Partners with Textron (NYSE:TXT) for Navy Bid

Alcoa (NYSE:AA) has joined Textron (NYSE:TXT) via their Alcoa Defense unit to shore up their bidding strength for the Ship-to-Shore Connector (SSC) program of the U.S. Navy.

Textron's Marine & Land Systems division also has L-3 Communications Inc. (NYSE:LLL) as part of the bidding team to secure the contract.

The value of the contract is around $4 billion, which would entail building 80 hovercrafts to replace the existing fleet of Landing Craft Air Cushion (LCAC) vehicles. The work for the Navy will begin in 2019.

Adding Alcoa Defense was a smart move, as they specialize in the development, design and manufacturing of aluminum structures at low cost and weight.

Each hovercraft will include over 100,000 pounds of aluminum each.

The vehicles will be used as landing craft by the U.S. Nave and the Japan Maritime Self-Defense Force.

Alcoa (NYSE:AA), Maaden, Award Middle East Contracts

Contracts to build a huge aluminum complex in Saudi Arabia were awarded by Alcoa (NYSE:AA) and Saudi Maaden to a number of companies, which were valued at $274.7 million.

A statement on the Saudi bourse website said U.S. Wagstaff, BWG Bergwerk, Ebner and SMS Siemag were the recipients of the contracts.

Once the complex is completed for the joint venture between Saudi Maaden and Alcoa, it will house an alumina refinery, aluminum smelter, a bauxite mine and a rolling mill.

Alcoa was at $10.48, gaining $0.26, or 2.57 percent as of 12:35 PM EDT.

Will Alcoa (NYSE:AA) Survive Next Dow Change?

Inspecting the performance of Alcoa's (NYSE:AA) share price over the last 15 years or so, the figures show the price today, other than the period surrounding January, 2009, when it plummeted to as low as $7.34 a share on the 2nd, is about the same as it was 15 years ago.

Today its share price is at $10.71, down $0.02, or 18 percent, as of 1:06 PM EDT.

This made me start to think that Alcoa may be in danger of being removed from the DJIA.

Even though they did have a decent last quarter, and their CEO believes demand should grow by 10 percent in the next year, it's hard to see that happening in the light of the darkening economic conditions, which is being revealed as the stimulus money runs down.

It's not just the performance of the company though, as its market cap is just at $10.94 billion, while newer companies in the tech industry like Apple (Nasdaq:AAPL), which has a market cap of $228.64 billion, and Google (Nasdaq:GOOG), which has a market cap of $155.54 billion, are far more representative of the type of economy we have in the U.S.

Either way, Alcoa looks like it's going to struggle for some time to come, and as the economic story unfolds, it's looking more and more like that aluminum demand and prices aren't going to grow in the way thought just a short month or two ago.

Alumina (NYSE:AWC) Profits Soar on Sales Volume and Higher Prices

Alumina Ltd. (NYSE:AWC) had a huge six month, as it soared past the earnings last year in the same half by 11 times, increasing from $4 million to $44 million. Analysts had been expecting $37 million in earnings.

Driving the resurgence were a huge spike in sales volume and surging metal prices.

According to Alumina Chief Executive Officer John Bevan, “Global alumina demand is forecast to grow at 12 percent for 2010 and pricing has improved.”

Alumina is in a joint venture with aluminum giant Alcoa (NYSE:AA) named AWAC, which produces about 25 percent of the world's alumina supply.

In 2010, AWAC is projected to produce close to 15.6 million tons of alumina, a slight downward revision of 200,000 tons.

Going forward, Bevan expects alumina to decouple from the aluminum price and reflect more closely the market where alumina is sold by traders, which now accounts for 40 percent of the overall market.

Under normal and past conditions, alumina prices were set based at a fixed percentage of aluminum prices.

Over the next several years that's expected to change. Bevan says he supports that because the current pricing mechanism doesn't include the costs of production, and that needs to be changed.

Century Aluminum (Nasdaq:CENX) Earnings in Positive Territory

Century Aluminum (Nasdaq:CENX) was profitable this second quarter, as it generated earnings of $5.1 million, or 5 cents a share. Last year in the same quarter the company was hammered by losses of $107.1 million, or $1.45 a share.

Even with the better performance, it was far below the estimated earnings average of 25 cents a share.

Revenue for the quarter rose to $287.9 million, a gain of 52 percent, coming short of the $292 million analysts were looking for.

The earnings results of the quarter came from forward contracts of $9.3 million connected, for the most part, to LME price protection options, according to Century.

Charges for the quarter included $16 million for energy costs at Hawesville, along with $7 million for market inventory adjustments.

Will Floating Yuan Help Alcoa's (NYSE:AA) Performance?

Alcoa (NYSE:AA) has probably done about as much as they can in cutting costs and preparing for a turnaround when it comes.

Over the last couple of years, aluminum prices have plunged by about 60 percent, and the shares have dropped to just below $11 a share, from the $30 range.

For better cost controls to compete in that regard, Alcoa is developing a bauxite mine in Brazil. They're spending about $1.5 billion on that project. Some of Alcoa's smaller competitors have been nipping away at their business with better prices, contributing to the overall poor performance of the company, the reason for the bauxite strategy.

Other projects are a large aluminum mining project in Saudi Arabia, and a effort to modernize Russian plants to better serve the domestic market there.

Recently they acquired window and door manufacturer Traco, to diversify their product line.

What could help them the most, is the recent decision by China to allow the yuan or renminbi float more against the U.S. dollar. That could generate more demand from China, although they've been cutting back in some areas to battle rising property prices in urban areas and a possible bubble.

The other problem with the renminbi is it is a potential double-edge sword, which could perform reverse and cause more challenges for Alcoa if that is the case.

If it performs as expected, it could be a good boost for Alcoa in the short term.

The bottom line though is still demand and aluminum prices. Until those elements in the equation change, Alcoa is going to continue struggle, along with its shareholders.

Alcoa (NYSE:AA): Aluminum Supply and Demand

There have been a number of interesting things happening in the aluminum industry, but unfortunately for Alcoa (NYSE:AA) and other producers, when added together it pretty much brings things back to where they were, with growing demand, but an increasing supply to balance it.

This is even with the news the Chinese are cutting back on aluminum production, as high electrical costs are slashing the margins in the industry.

Alcoa's CEO and Chairman Klaus Kleinfeld said he expects aluminum consumption to increase from 10 percent to 12 percent for 2010, a 2 percent increase over his previous estimates (on the high side).

Possibly in the second half some of that aluminum supply may dwindle based on lower prices, and the self-fulfilling prophecy may result in higher prices in the second half.

Some new aluminum ETFs could be a factor going forward as well, but it remains to be seen if they can raise the needed capital to fund the acquisition of aluminum.

The bottom line with aluminum prices seems to be it's as unpredictable as it has been, even with the estimated increase in demand.

Prices will determine the supply as always, and there isn't a lot to generate confidence this will change anytime soon.

Take Alcoa's (NYSE:AA) Performance with a Grain of Salt

It seems everyone is touting the performance of Alcoa (NYSE:AA) as a sign the economic recovery is in full swing, a very dubious assertion and conclusion by those who'll end up eating those words in the future.

This isn't to say Alcoa hasn't done some good things to generate a decent quarter, just that with aluminum prices still down, it was cost-cutting measures which helped them with earnings, not margins.

While that's good for management, it doesn't take care of the demand factor, which is what will drive the prices of aluminum. Until aluminum prices start to rise again, there's not a lot more Alcoa can do but wait things out.

To say the earnings of Alcoa in the latest quarter point toward a recovery can't even been taken seriously in light of aluminum prices. Cutting costs doesn't point to increased demand, no matter what the company and analysts' assert.

Until you see aluminum prices going up, the so-called economic indicator of Alcoa is largely irrelevant.

Alcoa (NYSE:AA) Losing Confidence of Wall Street

While there is no doubt Alcoa (NYSE:AA) will show some improvement over last year when they release their quarterly numbers on Monday, as the day approaches a number of analysts have downwardly revised earnings forecasts as the price of aluminum continues to fall.

Just since April, when aluminum prices had stood at $2,400 a ton, they have plummeted to close to $2,000 a ton as of Friday.

That's significant because it happened in the third quarter, which will have a strong impact on the performance of Alcoa during that time.

Most analysts had Alcoa's earnings at between 15 cents to 19 cents a share, and that has fallen largely to 10 cents to 12 cents a share recently, with many believing they'll start losing money as the year goes on.

Over the next twelve months or so there isn't a lot of optimism about aluminum prices moving up, and that will mirror how Alcoa performs.

Industrial Metals Lead Commodities Down for Quarter

Commodities experienced their worst quarter in over a year, as industrial metals plummeted in price on an extremely weak U.S. economy, China urban property inflation concerns, and the sovereign debt crisis in Europe.

The worst of the industrial metals was zinc, which fell 25 percent for the quarter, its worst performance since the latter part of 2008. Nickel was much better, dropping 22 percent for the quarter, followed by lead, which was down 19 percent, copper declining 17 percent, and aluminum falling 15 percent.

Heading into the fourth quarter doesn't look much better for commodities, as estimates from Barclays Capital have prices dropping even more, according to a recent report, especially copper and aluminum, which are used heavily in building homes.

With the bottom falling out from the U.S. housing market after the tax break was ended, along with the Chinese battling property inflation in their urban areas, the demand for industrial commodities are under extreme pressure until those situations turn around, which they don't look likely to any time soon.

Gold will continue to be a strong performer, and silver will probably shine when measured against other industrial metals.

Alcoa (NYSE:AA): What's not to Like? Short Term!

Alcoa (NYSE:AA) has been doing a lot of things right over the last several years, and no matter what they do it seems they aren't able to break through and return to the share price they've been accustomed to in the past.

That of course isn't something they have much control over for the most part, and the overall macroeconomic conditions have been prohibitive to them in the industries they serve. That isn't going to change any time soon, even with the attempt by CEO Klaus Kleinfeld's attempt to paint the near future as more rosy than it in reality will be.

Some of the good things Alcoa is doing which will ultimately pay off for them, is the $10.8 Saudi Maaden joint venture, which they've started construction on recently, the JSC Russing Shipbuilding partnership they just announced, and cutting back on can-sheet volumes, which weren't profitable for them.

In other words, they're expanding while cutting costs, and that will definitely pay dividends for them and their shareholders down the road, but there is little in the short term which is positive for the company. They are also increasing scale, which over the long haul should really position them strongly against their competitors.

Hopes of growing demand in China have been dampered some as the country attempts to control the property markets in its urban centers, which have been out of control in the inflationary sense.

That will result in lower aluminum demand, as other raw materials, which should fall below prior expectations. But even if that does materialize, and the demand for aluminum reaches the 10 percent Alcoa is looking for, that doesn't address the slowing U.S. and European markets, which will definitely cut into demand.

Another element that Alcoa has going for it over the long term is the emergence of aluminium ETFs, which will create an entirely new market for the lightweight metal.

While they are buying up aluminum now, their competitor Rusal is the major beneficiary at this time. Word is they are struggling to meet demand there, and that could help Alcoa going forward.

The only other short-term possibility of getting some traction for Alcoa is if the aluminum that is tied up by investors and contracts keeps the demand from being met, even though the supply is at a high level.

That seems unlikely to me, even though some think it's a real possibility.

Either way, Alcoa is doing a lot of good things to prepare for a rebound, and when that rebound comes, their share price should start to fly again.

Those with a long-term outlook could do very well with Alcoa, as it's not if they're going to surge in share price again, it's only a matter of when.

In the short term I think everyone needs to manage their expectations, and if they do fall even further in price, it should definitely be considered a buying opportunity for those looking to place some money in them.

Noranda Aluminum (NYSE:NOR) Gets Solid Analyst Marks

Noranda Aluminum (NYSE:NOR) received new coverage from Morgan Stanley (NYSE:MS) and Bank of America (NYSE:BAC), both of which like what they see. Credit Suisse, which already covers Noranda, also gave them solid marks on their near future.

Morgan Stanley just started covering Noranada, and thir first rating for the was an "Overweight," setting a price target of $11.

Bank of America also initiated coverage on Noranda, starting them off with a "Buy" rating, while also looking at a price target of $11 a share.

Finally, Credit Suisse announced they were giving the company an "Outperform," while setting an $11 price target as well.

You don't see a lot of times when analysts all give the same price target for a company, but here you have it in all three cases.

The producer of rolled aluminum coils and other aluminum products was at $7.71 a share, a $0.05 gain, or 0.64% move, as of 12:09 PM EDT.

Citigroup (NYSE:C), Morgan Stanley (NYSE:MS) See Higher Aluminum Prices

Contradicting a lot of other aluminum industry watchers, Citigroup (NYSE:C) and Morgan Stanley (NYSE:MS) analysts see aluminum prices pushing much higher based on tightening supplies.

Citigroup goes way out on the limb, saying aluminum prices will skyrocket to $2,500 a metric ton in 2011, while general consensus is aluminum prices will stay between $1,900 to $2,100 through that period of time.

Morgan Stanley isn't that optimistic, but still more optimistic than most others, as they see aluminum surging as high as $2,200 by the end of 2010, and reaching $2,295 in 2011.

The reason for the discrepancy in aluminum price outlook is based on how one interprets the impact of financial arrangements and how much of the high levels of supply will be released into the markets.

Those with lower price views believe there is too much aluminum stockpiled for the agreements in place to hinder the supply that much, which will keep prices lower, while those with the higher outlook believe those agreements and aluminum held by investors will limit the amount of aluminum to be released into the market, even with the near-record inventory.

There is also the aluminum ETFs which are creating an entirely new aluminum market to consider, but it's not clear at this time how that will impact prices short term, although they are sure to long term, as demand grows and battles over who acquires the aluminum supply emerge.

Higher aluminum prices don't guarantee increasing demand though, or necessarily more profits for aluminum suppliers, because if prices indeed go much higher than expected, and macro economic conditions remain the same, companies will cut back on buying aluminum, prices will fall again, and we'll be back to where we are now.

I would be surprised to see the aluminum price increase to the levels Citigroup and Morgan Stanley are projecting, as there seems to be more than enough aluminum supply available even with the physical aluminum that is tied up and not available to the market.