US-based Alcoa Corporation anticipates improved performance in its alumina segment in the fourth quarter, CFO Molly S. Beerman said Oct. 16 during the company's third-quarter earnings call.
Alcoa projects 2024 alumina segment shipments to reach 12.9 to 13.1 million mt, up 200,000 mt from previous projections due to increased trading volumes.
As a major consumer of caustic soda for alumina production, Alcoa is closely monitored by market participants to gauge demand for the raw material. Notably, caustic soda accounted for 16% of Alcoa's Q3 production cash costs in alumina refining, with inventory flow for the product at five to six months, according to the company.
Additionally, Alcoa estimates a full-year annual cost of $9 million for every $10/dmt change in the price of caustic soda.
Platts, part of S&P Global Commodity Insights, last assessed spot export caustic soda at $495/dmt FOB USG on Oct. 15, stable on the week but up $125 since Aug. 20.
Spot domestic caustic soda was assessed at $530/mt FOB US Plant, unchanged on the week but up $20 from Aug. 20.
Despite lackluster demand, caustic soda prices in the Americas, Europe, and Asia have risen in recent months due to limited availability, primarily driven by ongoing supply constraints from maintenance activities and outages at several production facilities worldwide.
Market participants expect US prices to remain high at least until November, when maintenance activities are anticipated to conclude and production returns to normal levels. This could contribute to Alcoa's expectations of lower production costs moving forward.
Alcoa reported revenue of $2.9 billion for Q3, nearly flat compared to the second quarter. Adjusted net income increased to $135 million, reflecting improved alumina prices and lower energy and raw material costs, only partially offset by lower prices in the aluminum segment.
The company forecasts a $30 million increase in adjusted EBITDA next quarter, driven by higher shipments and lower production costs.
