The New Year 2013 has come with great many hopes for the planetary universe. The election of Obama in the house, reforms for the economic development, reforms for increasing employment and holding the currency strong and finally still staying in the figure one place among the planetary economic systems. This has been the spirit of United States. Let us see what obstacles does the figure one economic system is confronting. First, the debt ceiling where in the US issues more than $ 1 trillion for its outgo taking to the immense financial shortage, so high unemployment rates from 7.8 per centum to 7.9 per centum as per the Bureau of Labor Statistics, negative GDP in the 4th one-fourth of 2012, lodging sector down and weak dollar in the currency war. Despite the economic downswing and fiscal market volatility there is an chance for investors. Celebrated Commodity analyst Jim Rogers in his recent article mentioned that investors must look out for the trade good market. He believes that for the twelvemonth 2013 and so on the trade good market will make better than good. He says, “ Invest in trade goods or it will be excessively late ” . But the market presently is demoing a different tendency whose impact is besides seen on the stock exchange of America.
Commodity market consists of the cherished metals, agricultural and the energy ( oil and Gas ) . A recent article on the Market Watch negotiations about how the stuffs are below their bench Markss. Particularly the metals are low. The nutrient monetary values are intensifying and so are the fuel monetary values. The major toll of this market has been seen in the metal sector and the building houses particularly Alcoa Inc. whose stock monetary value dropped by 3.31 % and is the worst executing stock on DOW.
Alcoa ( NYSE: Aa ) is the universe ‘s prima manufacturer of primary aluminium and fabricated aluminium, every bit good as the universe ‘s largest mineworker of bauxite and refiner of aluminum oxide. Its journey started in 1888 as a metal company with advanced merchandise like aluminium tea boiler. From there the company has diversified in assorted sections of car, aerospace, defence, furniture, lightweight ships, forgings, and consumer electronics. For more than 125 old ages the company has been the taking provider to these sections. Alcoa ‘s consumer market is across Asia Pacific, Australia, Brazil, Japan with about 26000 employees working for the progressive growing of the company.
The slow growing of the trade goods market is impacting the company. The aluminium monetary values along with steel have been low. The major cause of the slow in the metal industry is due to the negative LME ( London Metal Exchange ) and Alumina Price Index. Besides the debt ceiling argument wherein the authorities has announced 9.4 % cut in its outgo in defence country is besides one of the causes for concern. The company is the taking provider to many of the industry sector and the recession has impacted Alcoa as the demand for the markets are sulky. The Aerospace sector has shown a level gross revenues and the car sector besides has shown a 15-18 % in the market particularly the Heavy Truck and dawdlers section. Even the drink industry has a low demand for can packing. The major event of FED meeting in March is looked up as it will be a determinant factor on the monetary values of the metal. Apart from the Americas domestic economic system the company is besides exposed to the external factors. China, Asia ‘s major economic system has been menace to the American company for past few old ages. The Citic group of China is besides on the major enlargement run taking to supercharge US aluminium giant Alcoa to increase its command for the Alumina Expansion which means more to pass in the low demand scenario. Despite of all the bad intelligence around, the company is positive. Klaus Kleinfield CEO and Chairman of Alcoa see the positive growing in planetary demand of Aluminum as the China ‘s Bus industry and air hoses are easy depending upon Alcoa.
Furthermore, Harmonizing to me, there are good opportunities of the addition in the portion monetary value in close hereafter due to assorted factors. The recent trade signed by the company in COMAC air hoses in China shows optimistic marks. Further, looking at the economic system the democratic authoritiess disbursement cuts and higher revenue enhancement rates for the rich will indirectly inculcate money in the fiscal market. The rising prices rate of 2 % is besides predicted to be achieved. The PPI index of US market on entirety has risen by 0.2 % in Jan 2013. Furthermore, the democrat authorities will guarantee to do some reforms that will command the fuel and nutrient rising prices taking to more injection of money in the market. This means there will be low involvement rates on the loans for corporate which will increase their productive activity. Hence, natural stuffs ingestion will increase, taking to high demand for the aluminium. Besides, the aluminium market is besides affected by the tendencies and crazes. The addition in the lightweight cars will besides increase the ingestion of aluminium in the car sector. Further, the planetary markets of Europe and Asia are retrieving from lag represents optimism for aluminium. The company has a competitory advantage over its rivals as
Aluminum corp. of China ( CHINALCO ( NYSE: ACH ) ) being traded at a premium of approximately 2.9 % and giving a stiff competition to ALCOA is puting its stake on the consequences of the China ‘s large $ 150 billion substructure disbursement bundle. Therefore there is a strong opportunity of market being bullish for the aluminium industry.
Harmonizing to me Century Aluminum Co. ( NASDAQ: CENX ) being a little participant in the industry in comparing to Alcoa will confront a ruin since it has terminated its current power contract for its Hawesville smelter in Kentucky and will non be able to transport out production till it is non able to happen a good option to run this works.
Overall the metals of US may look low in today ‘s market but there are likely opportunities for the aluminium metal to turn to its old province of demand transcending the supply.