Macro worries surrounding Europe and global growth are obscuring what are really strong aluminum fundamentals, Klaus Kleinfeld, CEO of aluminum giant Alcoa, told CNBC’s “Closing Bell.”
“We have an upside and downstream business that is performing very well because in our end markets, we are seeing aluminum demand growing,” the Alcoa
CEO said. “We project aluminum demand to continue to grow 7 percent this year.”
Kleinfeld also said the aluminum market has come back into balance or even in a deficit while inventory has come down 27 days from the peak in mid-2009.
Although Kleinfeld said the U.S. economy is slowing down, demand in the automotive and aerospace sectors remains strong. “The aluminum content in cars is increasing because light-weighting is being strongly driven by new emissions regulations,” he said.
Kleinfeld also said that second-quarter earningsproved resilient despite the substantial drop in metal prices. He said that Alcoa still needs to cut costs, particularly in its upstream alumina business where the metal price hits directly.
“We are containing capacity,” Kleinfeld said. “By the end of this year we will have 14% of our global capacity curtailed.”