HomeResearch and NewsALCOA AND ALUMINUM MARKET REPORT

ALCOA AND ALUMINUM MARKET REPORT

EXECUTIVE SUMMARY: Alcoa is CONTRARIAN BUY at $15-16

Trade war is officially over as US and China signed the Phase.1 deal in the middle of January. Overall risk conditions switched to the high Greed mode not seen since the late 2017 with commodities have been finally playing catch up – only Nat Gas, Aluminum and Corn are in Fear mode.

Macroeconomic drivers turn to neutral as the hopes for Trade Deal and monetary stimulus improved business confidence. On the other hand reduced risks make global CBs less so dovish with the Fed is starting to think how to exit its REPO stimulus gambit and the ECB is not going to cut rates anymore. Chinese and EM economies stabilized with downside risk.  

Investors’ interest in commodities was really high over the last months. But it was concentrated in retail investors’ money flow as trading activity in commodity futures declined and net positioning improved moderately with Precious metals and Gasoline are the most overbought and Aluminum, Zinc and Nat. Gas are the most oversold

Aluminum industry finished the year in relatively depressed mood as the most hated metal in the LME with rising inventories and switching to surplus market as additional capacity to come on line over the next couple of years without corresponding demand growth. However we see a real chance for positive surprise both in demand (“green push”) and supply (cut back) 

Alcoa was the main headliner of that industry challenges as it was the first to report full year results and predict another surplus year not only for aluminum industry but for alumina and bauxite as well. As a result valuation discount to its AWAC based valuation reached extreme levels paving the way for value accretive actions from the company via sale/spin-offs 

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Oil Market Report - September 2022

As the crude oil market is experiencing its largest 90-day decline since March-April 2020, which was only exceeded prior to 2020 by market routs in 2014-15 and 2008-09, we see the limited downside in crude oil prices from the levels achieved and believe that the market would pass its trough before the winter starts as the fundamentals remains rather tight and only would get tighter in a couple of quarters ahead. On the demand side, both the OPEC and the IEA expected a rather robust growth of the global oil consumption in 2023, driven mainly by jet fuel and robust oil use for power generation in the Middle East and in Europe due to record natural gas and electricity prices. In addition, petroleum product markets, especially diesel, are expected to remain in deficit in coming quarters due to downstream capacity constraints outside of China as lower Chinese export quotas have sharply reduced its sales abroad and newly introduced taxes in India have discouraged exports from Asia’s largest supplier. 

oil, investment

Banking Sector Monthly Report - August 2022

US banks outperformed the broad market slightly in August 2022, for the first time over the last three months. However, BKX index ended the month in the red, for the 5th time out of the first 8 months of 2022. BKX index decreased by 2.4% MoM in August 2022 vs -4.2% MoM of SPX index. Absolute August performance was -0.5 std from the mean monthly performance, and it was in the bottom 28% of absolute monthly performance in the index history. 

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Oil Market Report - July 2022

Crude oil prices surged further in June 2022 for the second consecutive month, with ICE Brent and NYMEX WTI first-month contracts averaging nearly 5% higher on a monthly average basis despite a relatively volatile month and tumbling financial markets. The market was driven by a strong supply/demand outlook in the short term and geopolitical developments in major producing regions. The ICE Brent front-month contract increased by $5.54 in June 2022, or +4.9%, to average $117.50 / bbl, and NYMEX WTI front-month contract rose by $5.08, or +4.6%, to average $114.34 / b. 

oil, investment