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Investing.com — Alcoa (NYSE:AA) soared more than 9% after the CEO said China’s reining in of aluminum production will be a “game changer,” Bloomberg reported.
The industry has had years of gluts but China, which produces 55% of the global supply of aluminum, is taking steps to contain companies that rely on coal-fired power in a bid to meet a carbon neutrality goal by 2026. That could end decades of expansion that made China the top producer, Bloomberg said, citing an interview with Alcoa Chief Executive Officer Roy Harvey.
Prices for the metal are up 14% this year as China’s production is expected to slow.
“On the supply side, the real important thing here is China has really started to enforce its laws, it is not issuing operating permits,” Bloomberg quoted Harvey as saying. “That is the game changer, because when they chose to start actually enforcing this need for operating permits is when we started to see some discipline come back into how much capacity was coming into the market.”
Demand should also recover around the world, Harvey said.
On Tuesday, Morgan Stanley (NYSE:MS) upgraded the company to a buy-equivalent from equalweight saying Alcoa will benefit from short- and long-term dynamics in the aluminum industry.
