Alcoa 2Q14 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings.

Supply and demand for aluminum and alumina is balanced buy has tightened

“Supply and demand for both the alumina and aluminum markets are essentially balanced. However, both markets have tightened lately. In the case of metal, we’re now projecting a 930,000 metric ton annual deficit, up from 730,000 metric tons, and for alumina the projected surplus has shrunk from 2.2 million metric tons to 800,000 metric tons.”

The alumina market has tightened because Indian production lagging, Chinese imports increasing

“The 2014 alumina surplus tightened since the first quarter by roughly 1.4 million metric tons driven by two factors. First, Indian production is not coming online as quickly as we expected, and secondly, China imports are increasing. The change in the aluminum projection is driven by a lower surplus in China reflecting curtailments that have been executed.”

Increasing forecast for heavy truck demand in the US

“heavy-duty trucks, also a very good story here in the U.S. We actually are increasing our growth projection for this year. We used to have 5% to 9% and you see we are bringing it up to 10% to 14%. Now the orders are up 20% year-over-year and on a year to date basis even 28%. The order book is very nice set at 119 trucks, the historic average is 114, this is up 39%. Decent fundamentals 3.7% of the freight ton miles are up 1%, freight price up. Production we believe the forecast is increasing. We do think 140,000 units on a year to date basis, this is as a 15% up on a year on year basis.”

Chinese market is stabilizing

“China, we see, we believe it’s 0% to 4% but slightly up from what we said before, minus 1% to 2%, 3%, and the reason for it is the market is stabilizing.”

Aluminum improvements to the F-150

“When you look at the F-150 that was launched earlier this year, I mean the F-150 is 700 pounds lighter and what Ford said also is it accelerates, breaks, [tows] (ph) and resists corrosion like never before. That’s Ford’s words but I couldn’t have said it in a better way honestly.”

Not a far way off from 3D printing becoming reality. Currently best for prototyping

:”No, no, no, no, we are not a long way off of 3D printing becoming a reality. I would say in the manufacturing space, we’re probably absolutely cutting edge when it comes to using 3D printing in multiple ways, and you saw that I mentioned it in my presentation, I mean that the La Porte facility will also have 3D printing capacity. The main use for it today is prototype, rapid prototyping and this is where it allows us to cut down the prototyping times from what used to be 18 months because you had some time in there for having to make tooling down to weeks.”

Indonesian export ban changing the supply demand dynamics for bauxite in China

“at least for the time being, I am positively surprised about how strict Indonesia is and this is changing the supply dynamics in China and I mean we are seeing that the Chinese are looking for other opportunities. You have seen that at this point in time you are right, they still have a pretty substantial supply for alumina and also the demand there has gone down a little bit with the smelter closures that we saw in China and what Bill showed in his last slide there is there is still a little bit of an overhang in the Chinese alumina market but it’s shrinking. ”