Last Thursday, Alcoa announced that it was cutting its global smelting capacity by 12%. Investors initially responded with mixed emotions. However, the stock rallied on Monday after the company reported earnings in line with expectations. More importantly, management said it expected global demand to rise by 7%.
In its earnings announcement, management provided more details regarding its restructuring plans. Among other things, it said it would be shutting down its operations in Portovesme, Italy.
This is bad news for the beleaguered boot-shaped country because it will now have to import all of its aluminium. Even worse, it strips the country of its foothold in aluminium. Here’s what Italy’s Centroal (via Reuters) had to say.
“Loss of the only national producer of primary metal, even if it is not sufficient to cover all Italy’s needs, makes the transformation sector totally dependent on foreign producers, almost all of whom are from outside the European Union,” Centroal said in a statement.