Alcoa Falls After Announcing Capacity Cuts

[Stocks-to-Watch]

Alcoa (AA) stock fell about 2.7% in early trading after the aluminum company announced that it plans to cut its aluminum smelting capacity by about 12% by the middle of the year. But the cut isn’t likely to boost aluminum prices as the market still appears oversupplied, some industry-watchers are saying. Aluminum prices are down more than 27% from their 2011 peak.

“These are difficult but necessary steps to improve Alcoa’s competitiveness, preserve and grow shareholder value and protect jobs in the rest of the Alcoa system,” said Alcoa Chairman and CEO Klaus Kleinfeld in a stetament.

“The curtailments are expected to be complete by the first half of 2012. Alcoa’s alumina production will be reduced across the global refining system to reflect the final curtailments in smelting as well as prevailing market conditions. The curtailments will contribute to the Company’s long-term goal of lowering Alcoa’s position on the world aluminum production cost curve by 10 percentage points.”



Original Article Source by Barrons.com