Alcoa reports $1.19 billion loss in Q4; may again cut production

15 January 2009

The world's third largest producer of aluminum behind Rio Tinto Alcan and Rusal said yesterday that it lost $1.19 billion during its fourth quarter by taking a hit of $920 million one-off charge and global demand and prices for aluminum dropped.

Due to the worsening global economy, the impact in major aluminum markets particularly from the automotive, commercial transportation and building and construction sectors saw the price of aluminum declining by 35 per cent.

The demand for aluminum, which is also used to make cars, beer cans and aircraft windows have declined sharply due to the ongoing global financial crisis.

The long-drawn machinists strike at Boeing has not helped Alcoa, which resulted in a $10 million loss in sequential results.

In June, Alcoa had already cut 18 per cent of its alumina and aluminium production capacity due to the decline in prices and demand for the metal, but experts feel that Alcoa may have to make more then the present 18 per cent cut in production as the global financial situation is not going to improve for a long time.

China's biggest aluminum producer, Chalco had also announce a 18 per cent cut in production in October while Rio Tinto said last month it will reduce capital spending and sell assets to pay its mountain of debts derived from the acquisition of Alcan.