PPI for final demand decreases 0.2% in December; goods decline 0.7%, services rise 0.1%

The Producer Price Index for final demand decreased 0.2 percent in December. Final demand prices increased 0.3 percent in November and fell 0.4 percent in October. In December, prices for final demand goods declined 0.7 percent and the index for final demand services advanced 0.1 percent.
Producer Price Index

Bohn Aluminum & Brass, 1947 …item 3.. Alcoa Cuts Global Aluminum Forecast on China Slowdown — Aluminum will average ,212 a ton next year (Thursday, 11 October 2012) …
Producer Price Index
Image by marsmet525
“We do see a slight slowdown in some regions in end- markets, and the main driver for this is China,” Chairman and Chief Executive Officer Klaus Kleinfeld said on a conference call with analysts. Chinese demand may pick up at the end of the fourth quarter because of stimulus spending, he said.
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…..item 1)…. Habor Aluminum … www.harboraluminum.com/

> aluminum industry analysis, market outlook & forecasts

> key aluminum news & our comments free!

> aluminum other analysts views

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…..item 2)…. Reuters … www.reuters.com … Press Release

Hydro and Orkla to form the world’s leading aluminium solutions provider
* Reuters is not responsible for the content in this press release.

Mon Oct 15, 2012 1:00am EDT

www.reuters.com/article/2012/10/15/idUS33196+15-Oct-2012+…

Norsk Hydro ASA and Orkla ASA have agreed to combine their respective profiles, building systems and tubing business, creating the world’s leading aluminium solutions provider. The new combined company, to be named Sapa, will be a 50/50 joint venture owned by Hydro and Orkla.
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…..item 3)…. HELLENIC SHIPPING NEWS – Worldwide … www.hellenicshippingnews.com

Online Daily Newspaper on Hellenic and International Shipping

Tuesday, 16 October 2012 | 17:43
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Alcoa Cuts Global Aluminum Forecast on China Slowdown

Thursday, 11 October 2012 | 00:00

www.hellenicshippingnews.com/News.aspx?ElementId=582a442a…

Alcoa Inc. (AA), the largest U.S. aluminum producer, cut its forecast for global consumption of the metal by 1 percentage point on slowing Chinese demand, helping to trigger a decline in Asian stocks for a third day.

Demand will climb by 6 percent this year, New York-based Alcoa said yesterday in its third-quarter earnings statement. That’s less than the company’s July prediction for a 7 percent increase in usage.

“We do see a slight slowdown in some regions in end- markets, and the main driver for this is China,” Chairman and Chief Executive Officer Klaus Kleinfeld said on a conference call with analysts. Chinese demand may pick up at the end of the fourth quarter because of stimulus spending, he said.

The forecast revision by Alcoa, typically the first company on the Dow Jones Industrial Average to report earnings, comes a day after the International Monetary Fund and Rio Tinto Group, the world’s third-biggest mining company, trimmed their growth outlook estimates for China. Aluminum prices in London touched a 34-month low in August as global supply exceeded demand.

“The global economy is clearly slowing,” Lloyd O’Carroll, a Richmond, Virginia-based analyst for Davenport & Co., said yesterday in an interview. “That’s what the IMF said today and so I think what Alcoa is doing is consistent with that.”

— Shares Drop

Alcoa traded at 7.02 euros as of 9:38 a.m. in Frankfurt. That’s equivalent to .03, a 1.1 percent decline from yesterday’s closing price in New York. The MSCI Asia Pacific Index (MXAP) slipped 0.9 percent at 4:42 p.m. in Tokyo, while Aluminum Corp. of China Ltd., the nation’s biggest producer of the metal, dropped as much as 2.1 percent in Hong Kong.

Demand from heavy-truck and trailer manufacturing will fall this year, Alcoa said. It now sees Chinese truck and trailer output slumping as much as 21 percent, compared with a decline of as much as 8 percent projected three months ago. Chinese can and packaging growth may be 8 percent, down from Alcoa’s July forecast of as much as 20 percent.

The IMF yesterday cut its global growth forecast and lowered its projected expansion for China, the world’s biggest aluminum user, by 0.2 percentage point annually, to 7.8 percent this year and 8.2 percent in 2013. London-based Rio, which has pulled back from projects as sluggish global growth reduced demand for metals, yesterday lowered its estimates for China’s growth to below 8 percent.

— Net Loss

Alcoa reported a third-quarter net loss of 3 million, or 13 cents a share, compared with net income of 2 million, or 15 cents, a year earlier as sales dropped 9.2 percent. Excluding costs related to environmental remediation and the settlement of a lawsuit brought by Aluminium Bahrain BSC (ALBH), Alcoa had per-share profit of 3 cents. The average of 18 estimates compiled by Bloomberg was for break-even earnings per share.

“We are clearly seeing the impact of a Chinese slowdown globally and it’s indicated in Alcoa’s numbers,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages almost 0 billion.

Alcoa reiterated that demand will increase this year in the global aerospace, auto, packaging and construction industries.

The company said it improved productivity across all four business units. Its rolled products business posted the highest ever after-tax operating income and the engineered products and solutions segment had a record margin on earnings before interest, taxes, depreciation and amortization.
Total sales fell to .83 billion from .42 billion, beating the .56 billion average of 10 estimates.

— Civil Suit

Alcoa settled a four-year racketeering lawsuit brought by Aluminium Bahrain, the state-owned smelter known as Alba, both companies said yesterday. Alba’s 2008 civil suit alleged that Alcoa bribed officials in Bahrain to charge more for alumina. Alba said it paid 0 million more than it should have.

Alcoa will pay Alba million in two cash installments and agree to a long-term sales agreement, without admitting liability. Alba said the settlement has a total value of 7 million.

Alcoa, Rio Tinto, Norway’s Norsk Hydro ASA (NHY) and closely held Zeeland Aluminum have cut 1.21 million metric tons of production capacity since mid-2011, according data compiled by Bloomberg.

Aluminum for delivery in three months on the London Metal Exchange averaged ,950 a ton in the third quarter, 20 percent less than a year earlier. It traded at ,024 a ton as of 8:47 a.m. local time.

Prices below ,000 may drive more production cuts, Ken Hoffman, a Bloomberg Industries analyst, said last week.

— Decoupled Price

Alcoa’s Kleinfeld said that the company predicts global demand will exceed supply by 262,000 tons this year.

The aluminum price is “decoupled” from the supply and demand “fundamentals” of the market, and instead is being influenced by investor concerns about the European debt crisis and the slowdown in China, he said on the call.

“The macro factors are currently dominating the pricing situation,” he said. “But it can reverse very, very quickly.”

Aluminum will average ,212 a ton next year, according to the median of 22 analyst estimates compiled by Bloomberg. The metal traded at more than ,300 in 2008 before the financial crash, and reached a 2011 intraday high of ,803 a ton.

Alcoa is organized into four segments: alumina, which mines bauxite and processes it into the precursor to aluminum; primary metals, which smelts aluminum; flat-rolled products, which makes sheets used in beverage cans as well as airplane wings and car parts; and engineered products and solutions, which produces aerospace fasteners, turbine blades and truck wheels.

— Source: Bloomberg

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