Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Alcoa’s low operating costs and modest debt levels have driven Fitch to affirm an issuer default rating of BB+ with a stable outlook.


The rating agency found Alcoa’s alumina-making costs benefited from production plants being closely located to its bauxite mines, thus reducing transportation costs. 


The European aluminum maker’s smelters are also located on the same properties as cast houses, which optimizes its aluminum production costs, especially for value-added products like slab, billets, and alloys, Fitch observed in its rating report.


Moreover, the company’s operations have continued despite COVID-19-related shutdowns in the countries where it operates, which will likely to help it post lower losses before the markets recover.


Global aluminum prices, however, could impact the company’s earnings during this time, Fitch pointed out in its report, citing Alcoa’s estimates that a $100/mt change in LME aluminum could shock the company’s EBITDA by $219mn.

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