Alcoa Inc. (AA) recently realigned its Global Primary Products (GPP) business organization in order to poise the company to seize growth opportunities on economic recovery.
Alcoa has named John Thuestad as the Chief Operating Officer for GPP Worldwide and Jean-Pierre Gilardeau as the President for GPP for North America and Iceland. Thuestad was previously the President of GPP’s U.S. branch, while Gilardeau had been President, GPP-Canada and Iceland.
Alcoa also raised its annual forecast for global aluminum consumption. The company now predicts that global consumption will decline by 5.5%, while the previous forecast was a decline of 7%.
The company attributed the improved outlook to a stronger demand for the metal in China. Alcoa believes the economic stimulus spending in China will drive up the country’s aluminum consumption by 8% in the second half. The full year consumption is expected to be up by 4%.
Aluminum producers have been facing weak demand since mid-2008. Companies such as Alcoa and Century Aluminum (CENX) have reported losses for three consecutive quarters.
Demand for aluminum has declined sharply in both developed and developing nations primarily due to weakness in the two major end markets – Automobile and Construction. Significant decline in demand along with high inventory levels has led to lower aluminum prices. In response to falling demand and lower prices, the primary aluminum industry has announced significant production cuts.
Despite production cuts and higher expected consumption in China, we believe the aluminum market will remain oversupplied for the rest of 2009. Demand for the metal is expected to remain low for the next couple of quarters.
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