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Released April 23, 2020 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Two months before COVID-19 shutdowns swept the U.S., things already were looking bad for the aluminum market. Alcoa Corporation (NYSE:AA) (Pittsburgh, Pennsylvania), whose economic health typically is viewed as a bellwether, said in January that the global aluminum supply would exceed demand by up to 1 million metric tons in 2020. Three months later, Alcoa is gutting expenditures and preparing to close underperforming facilities--and other aluminum majors could follow. Industrial Info is tracking more than $95 billion worth of projects worldwide that are related to the production or refining of aluminum, more than $34 billion of which currently has a 2020 kickoff date.
Roy Harvey, the chief executive officer of Alcoa, said that "while we reported a solid first quarter with a strong cash balance, the world has fundamentally shifted due to the COVID-19 global pandemic, and we are taking decisive actions to address this crisis." These include a $100 million reduction in non-critical capital expenditures; a $25 million delay in non-regulated environmental and Asset Retirement Obligations (ARO) spending; and $220 million in deferred pension contributions.
Alcoa announced Wednesday that it would suspend its quarterly projections on global supply/demand balances for bauxite, alumina and aluminum, "due to the uncertainty regarding the COVID-19 pandemic and its effect on the global economy." But analysts at CRU Group expect aluminum demand in the U.S. alone to fall 13% in 2020, and believe only industry-wide curtailments could keep prices from hitting catastrophic, long-lasting lows.
The company also said it would close its remaining 230,000 metric tons of "uncompetitive" smelting capacity at its Intalco smelter in Ferndale, Washington, which had recorded a net loss of $24 million in the first quarter of 2020. The closure is expected to be complete by the end of July 2020. The Intalco facility employs about 700 people. For more information, see Industrial Info's plant profile.
As part of a longer-term response to the COVID-19 pandemic and low commodity prices, Alcoa executives said the company will consider further "potential sales of non-core assets to generate between $500 million and $1 billion in cash by early 2021, and an evaluation of the competitiveness of existing production capacities, focusing on 1.5 million metric tons of global smelting capacity and 4 million metric tons of global alumina refining capacity."
Alcoa's first-quarter earnings stood at $80 million, compared with a $199 million net lost in first-quarter 2019, largely due to a special gain on the previously announced sale of a waste treatment facility in Arkansas. But when excluding that and some smaller special items, the company reported an adjusted net loss of $42 million. Sales tumbled 12% in the first quarter to $2.38 billion, from $2.72 billion in the same period last year, as prices for aluminum and other commodities fell sharply.
Aluminum Projects of All Sizes Face Setbacks
Globally, Industrial Info is tracking $1.8 billion worth of projects related to the production or refining of aluminum that are facing delays from, or have otherwise been affected by, COVID-19 precautions.
Click on the image at right for a graph detailing global aluminum projects delayed or otherwise affected by COVID-19, by country.
In the U.S., affected companies include titans like General Motors Corporation (NYSE:GM) (Detroit, Michigan), which suspended $3 million in maintenance at its Powertrain Castings Foundry in Bedford, Indiana, from March until mid-summer at the earliest; foreign-owned companies like 2A SpA (Turin, Italy), whose U.S. subsidiary is suspending $5 million in equipment additions at its casting and foundry facility in Auburn, Alabama, until the spring of 2021; and smaller companies like Wisconsin Aluminum Foundry Company Incorporated (Manitowoc, Wisconsin), which has put a $2 million expansion of its aluminum foundry in Manitowoc on hold until sometime next year. For more information, see Industrial Info's reports on the Indiana, Alabama and Wisconsin projects.
Globally, Alcoa is soldiering on with many of its own projects deemed by various governments as "essential," including a $150 million addition to its Juruti Bauxite Mine in Brazil's state of Para. A new deposit, near an existing deposit, will include a new crusher and conveyor system to maintain production capacity. Basic engineering for the addition continues, although project approval, which had been planned for the third quarter, could be delayed. For more information, see Industrial Info's project report.
According to Alcoa's website, "all of Alcoa's bauxite mines, alumina refineries, aluminum smelters, cast-houses and its rolling mill remain operational and with appropriate protocols in place to protect our workforce, suppliers, customers and communities. Those actions include alternating shift patterns, social distancing, increased cleaning and disinfecting, remote work where practical and regular communication to our workforce regarding personal hygiene, including frequent handwashing."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
Roy Harvey, the chief executive officer of Alcoa, said that "while we reported a solid first quarter with a strong cash balance, the world has fundamentally shifted due to the COVID-19 global pandemic, and we are taking decisive actions to address this crisis." These include a $100 million reduction in non-critical capital expenditures; a $25 million delay in non-regulated environmental and Asset Retirement Obligations (ARO) spending; and $220 million in deferred pension contributions.
Alcoa announced Wednesday that it would suspend its quarterly projections on global supply/demand balances for bauxite, alumina and aluminum, "due to the uncertainty regarding the COVID-19 pandemic and its effect on the global economy." But analysts at CRU Group expect aluminum demand in the U.S. alone to fall 13% in 2020, and believe only industry-wide curtailments could keep prices from hitting catastrophic, long-lasting lows.
The company also said it would close its remaining 230,000 metric tons of "uncompetitive" smelting capacity at its Intalco smelter in Ferndale, Washington, which had recorded a net loss of $24 million in the first quarter of 2020. The closure is expected to be complete by the end of July 2020. The Intalco facility employs about 700 people. For more information, see Industrial Info's plant profile.
As part of a longer-term response to the COVID-19 pandemic and low commodity prices, Alcoa executives said the company will consider further "potential sales of non-core assets to generate between $500 million and $1 billion in cash by early 2021, and an evaluation of the competitiveness of existing production capacities, focusing on 1.5 million metric tons of global smelting capacity and 4 million metric tons of global alumina refining capacity."
Alcoa's first-quarter earnings stood at $80 million, compared with a $199 million net lost in first-quarter 2019, largely due to a special gain on the previously announced sale of a waste treatment facility in Arkansas. But when excluding that and some smaller special items, the company reported an adjusted net loss of $42 million. Sales tumbled 12% in the first quarter to $2.38 billion, from $2.72 billion in the same period last year, as prices for aluminum and other commodities fell sharply.
Aluminum Projects of All Sizes Face Setbacks
Globally, Industrial Info is tracking $1.8 billion worth of projects related to the production or refining of aluminum that are facing delays from, or have otherwise been affected by, COVID-19 precautions.
Click on the image at right for a graph detailing global aluminum projects delayed or otherwise affected by COVID-19, by country.In the U.S., affected companies include titans like General Motors Corporation (NYSE:GM) (Detroit, Michigan), which suspended $3 million in maintenance at its Powertrain Castings Foundry in Bedford, Indiana, from March until mid-summer at the earliest; foreign-owned companies like 2A SpA (Turin, Italy), whose U.S. subsidiary is suspending $5 million in equipment additions at its casting and foundry facility in Auburn, Alabama, until the spring of 2021; and smaller companies like Wisconsin Aluminum Foundry Company Incorporated (Manitowoc, Wisconsin), which has put a $2 million expansion of its aluminum foundry in Manitowoc on hold until sometime next year. For more information, see Industrial Info's reports on the Indiana, Alabama and Wisconsin projects.
Globally, Alcoa is soldiering on with many of its own projects deemed by various governments as "essential," including a $150 million addition to its Juruti Bauxite Mine in Brazil's state of Para. A new deposit, near an existing deposit, will include a new crusher and conveyor system to maintain production capacity. Basic engineering for the addition continues, although project approval, which had been planned for the third quarter, could be delayed. For more information, see Industrial Info's project report.
According to Alcoa's website, "all of Alcoa's bauxite mines, alumina refineries, aluminum smelters, cast-houses and its rolling mill remain operational and with appropriate protocols in place to protect our workforce, suppliers, customers and communities. Those actions include alternating shift patterns, social distancing, increased cleaning and disinfecting, remote work where practical and regular communication to our workforce regarding personal hygiene, including frequent handwashing."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
