ALCOA: the big picture for the stock

ALCOA: the big picture for the stock

2022-12-20 • Updated

Historical perspective

At first sight, the stock dynamics of Alcoa Corporation are hardly promising.

The price started the year 2019 at around 27 USD per share. These days, it trades at the levels of 20 USD, showing a 25% drop in stock value compared to January.

ALCOADaily.png

On a larger scale of observation, it is about the lowest level the corporation’s stock has ever been at through the last 30 years. You may see that on a historical chart below.

Alcoa 2.png

Source by: www.tradingeconomics.com

The reasons

The logical questions are “why is this happening?” and “what to expect?”.

First, we have to take into account the price of aluminum as it is the basic production element of Alcoa.

The price for this commodity has decreased by approximately 2% during this year, having dropped from 1800 USD per ton at the very beginning of 2019 to the current 1758 USD.

Price_aluminium.png

Source by: www.tradingeconomics.com

In fact, it is the continuation of a larger declining trend that has started in 2008, even if we remove the 2009 slump from the account.

Price_aluminium 2.png

Source by: www.tradingeconomics.com

The correlation between the Alcoa stock price and the aluminum price is not direct. However, a certain degree of interdependence is visible from the chart.

Extrapolating the recent and historical dynamics, one may assume that there will be no brighter future for Alcoa. Although that still may be the case, certain recent reports say that the aluminum industry and Alcoa, in consequence, may be revitalized in the nearest future.

The future

The good news is coming from quite an unexpected side: the ecology. Global reports keep increasing the pressure on the plastic bottle producers referring to the entire islands of plastic garbage drifting in the oceans. Simple calculations make the aluminum can production a feasible alternative both from the financial and the ecological perspective (source: https://www.reuters.com/). That would definitely raise the demand for aluminum production, where Alcoa stands as a global #1.

Also, the trade war between the US and China seems to be approaching its logical conclusion. That would also improve the climate for the aluminum corporation.

Therefore, although we do have to take into account the historical dynamics, there are some global factors, which may act in favor of Alcoa and hence increase its stock’s market value.

Trade Alcoa stocks

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