Aluminum Sector Jumps On Earnings, Sale

    Aluminum producers opened Wednesday higher after Alcoa's quarterly earnings indicated strong demand and news broke of a private equity buyout of certain aluminum plants. In morning trading, Alcoa  was up 82 cents, or 2.4%, to $35.72; Alcan gained 63 cents, or 1.2%, to $54.65; and Aluminum Corporation of China Limited  jumped $1.68, or 5.8%, to $30.68.

     Late Tuesday, the world's largest aluminum producer reported a first quarter profit that surged from rising prices. Alcoa stated earnings of $662 million, or 75 cents per share, compared to $608 million, or 69 cents per share, a year ago. On the continuing operations basis used by analysts, earnings were $673 million or 79 cents per share, beating analysts¡¯ expectations of 76 cents per share. Alcoa benefited from the higher pricing on growing demand, particularly from China. The Chinese economy grew 11% last year and the country is gobbling up aluminum for use in construction alloys.

     Alcoa said in a conference call that it expects Chinese demand to rise 23% this year. The company also said increasing demand from India and Russia should help overcome flat North American demand and pegged worldwide growth at 7.7%.  On Wednesday morning, Xstrata announced it was selling all of its aluminum interests to Apollo Management for $1.15 billion. Apollo Management is a New York-based private equity firm run by billionaire Leon Black..   The divestiture of the aluminum assets doesn't come as a complete surprise since the Swiss miner has focused on its nickel production recently. The company only acquired the aluminum assets in its purchase of nickel miner Falconbridge Limited in 2006.

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