Alcoa (NYSE:AA) is cutting down on alumina production capacity in its largest market by about 390,000 metric tons to align production with smelter curtailments announced earlier this year.
The New York-based maker of aluminum products will reduce refining capacity in the Atlantic region by about 4%. That market represents about 50% of Alcoa’s total global refining capacity of 18 million metric tons a year.
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The move follows an announcement by Alcoa earlier this year that it would close or curtail 531,000 metric tons of smelting capacity. More than half of that resulted in the permanent closure of capacity in Tennessee and Texas, and the rest, about 5% of its total smelting capacity, came from smelters in Spain and Italy.
The company said it has finally reached an agreement with government authorities and unions in those European countries and can now begin closing down the plants.
The 90,000 metric ton Spanish smelter is scheduled to be shut by the first half of this year. The smelter in Italy, which capacity of 150,000 metric tons, will close by the end of the year.
Alcoa, which has seen its stock fall 46% from a year ago, will kick off earnings season next week and is expected to post a quarterly loss. The company has been trying to trim global operations and raise prices in an effort to offset a weak aluminum market.
“Alcoa is taking these steps to avoid aggravating alumina oversupply in the Atlantic region and to enhance the efficiency of our refining system,” Alcoa’s president of global primary products, Chris Ayers, said in a statement.