CNBC EXCLUSIVE: CNBC TRANSCRIPT: CNBC'S MARIA BARTIROMO SPEAKS WITH ALCOA CHAIRMAN & CEO KLAUS KLEINFELD TODAY ON "CLOSING BELL WITH MARIA BARTIROMO"

Klaus Kleinfeld
Getty Images
Klaus Kleinfeld

WHEN: Today, Thursday, Oct. 7th at 4pm ET

WHERE: CNBC's "Closing Bell with Maria Bartiromo"

Following is an unofficial transcript of a CNBC EXCLUSIVE interview with Klaus Kleinfeld, Alcoa Chairman & CEO, today on CNBC's "Closing Bell with Maria Bartiromo" at 4pm ET.

All references must be sourced to CNBC.

**********************************

MARIA BARTIROMO: JOINING ME NOW IN AN EXCLUSIVE INTERVIEW ON THE TELEPHONE, ALCOA CHAIRMAN AND CEO KLAUS KLEINFELD. IT IS WONDERFUL TO HAVE YOU ON THE PROGRAM. THANK YOU FOR JOINING US.

KLAUS KLEINFELD: HELLO, MARIA. GOOD TO HEAR YOU VOICE.

BARTIROMO: REVENUE UP 15% OVER THE THIRD QUARTER '09. INCOME FROM CONTINUING OPERATIONS LOOKS BETTER THAN EXPECTED. CAN YOU CHARACTERIZE THE QUARTER FOR US?

KLEINFELD: ABSOLUTELY. IT IS A SOLID THIRD QUARTER 2010 PERFORMANCE, ENHANCED LIQUIDITY, IMPROVED BALANCE SHEET, STRONG PERFORMANCE ON THE DOWNSTREAM BUSINESS. TOP PERFORMANCE ON THE MID-STREAM BUSINESS. GOOD IMPROVEMENT ON THE UPSTREAM AGAINST THE SUBSTANTIAL HEADWINDS THAT WE'VE BEEN SEEING. OVERALL, I THINK THAT SOLID RESULTS.

BARTIROMO: AND CERTAINLY A SOLID MOVE IN THE PRICE OF ALUMINUM. WHAT ARE YOU EXPECTING IN TERMS OF PRICES? YOU SAW A BIG SPIKE OF 16% IN THE QUARTER. ARE YOU EXPECTING PRICES TO CONTINUE TO MOVE HIGHER?

KLEINFELD: WE ABSOLUTELY ARE OPTIMISTIC ON THAT. WE JUST RAISED OUR DEMAND AGAIN, PROJECTION FOR THIS YEAR, WE RAISED IT IN THE SECOND QUARTER FROM 10% GLOBAL ALUMINUM DEMAND INCREASED THIS YEAR TO 12%.WE ARE RAISING IT AGAIN TO 13%. ONE THING THAT'S IMPORTANT TO NOTE, EVEN THOUGH THE ALUMINUM PRICE HAS GONE UP IN THE LAST WEEKS, YOU TYPICALLY HAVE LAG TIME UNTIL IT HITS OUR BOTTOM LINE WHICH IS TYPICALLY TWO WEEKS. WE DIDN'T GET MUCH-- ACTUALLY ALMOST NOTHING OF THAT INCREASE INTO THE THIRD QUARTER. YOU WOULD SEE THAT COMING THROUGH IN THE FOURTH QUARTER.

BARTIROMO: KLAUS, TALK TO US ABOUT WHAT'S GOING ON WITH THE CHINESE. YOU JUST HEARD THE ANALYSTS ON THE YEAR TALKING ABOUT THE SHIFT IN OUTPUT. I KNOW CHINA HAS BEGUN THAT PROGRAM OF SHUTTING DOWN OLD INEFFICIENT FACTORIES, STEEL MILLS. HOW MUCH OF AN IMPACT DID THAT HAVE ON THE PRICE AND WHAT DO YOU EXPECTING IN TERMS OF PRODUCTION OF ALUMINUM COMING OUT OF CHINA?

KLEINFELD: CHINA IS AN IMPORTANT SECTOR BUT NOT THE ONLY ONE.YOU SEE THAT ALSO -- MARKET TIGHTNESS IS THE SAME THING. WHEN YOU LOOK AT EUROPE AS WELL AS WHEN YOU LOOK AT THE U.S. REFLECTED IN THE REGIONAL MARKET PREMIUMS WHICH ARE AT ALL-TIME HIGHS. TALKING ABOUT CHINA, SOMETHING INTERESTING HAPPENING THERE. ON THE SHORT TERM CHINA IS CURRENTLY IN THE PROCESS OF FINALIZING THEIR CLOSING OUT THEIR 11 FIVE-YEAR PROGRAM WHICH COMES TO AN END OF THIS YEAR. AND PROVINCES ARE SCRAMBLING TO REACH THEIR ENERGY EFFICIENCY/EMISSIONS TARGET. THAT LEADS TO MASSIVE CLOSURES. I MEAN, SOME OF THE PROVINCES. WE KNOW THAT ABOUT 600,000 TONS OF SMELTING CAPACITY HAVE ALREADY BEEN TAKEN OUT AS WE SPEAK. AND THERE WILL BE MOST LIKELY ANOTHER 600,000 TO 700,000 TONS COMING THE END OF THIS YEAR. THERE IS NEW CAPACITY POTENTIALLY COULD BE SWITCHED FURTHER IN THE WEST.THAT'S ONE THING. ON THE SHORT TIME. AND -- THE MIDTERM, WE ACTUALLY SEE THAT IN THE NEW FIVE YEAR PROGRAM THAT'S CURRENTLY IN DISCUSSION. THERE ARE TARGETS IN THERE, TO MAXIMUM PRODUCTION FOR CERTAIN INDUSTRY ALSO FOR THE ALUMINUM INDUSTRIES. FOR THE ALUMINUM INDUSTRY THEY ARE TALKING ABOUT A MAXIMUM PRODUCTION OF 20 MILLION IN THE YEAR 2015 WHICH IS THE END OF 12 FIFTH-YEAR PROGRAM. THE EXPERTS BASICALLY SAY THAT THIS WILL MOST LIKELY NOT BE REACHED BECAUSE OF THE EMISSIONS.VERY TOUGH EMISSIONS REGULATIONS. CHINESE GOVERNMENT VERY, VERY SERIOUS ABOUT THIS ENERGY EFFICIENCY AND EMISSIONS. SO IT IS PROBABLY ONLY GOING TO BE AROUND 17 TO 18 MILLION. GIVEN THE DEMAND INCREASE, THERE IS GOING TO HAVE AN INTERESTING DYNAMIC AND OBVIOUSLY OPENS UP A LOT OF OPPORTUNITIES IN REGARD TO PRICING AS WELL AS OTHER OPPORTUNITIES.

BARTIROMO: PUTTING THE PRODUCTION AND THE SUPPLY STORY ASIDE WHAT ABOUT THE DEMAND SIDE OF THE STORY? IS IT STILL LARGELY THE CHINESE AND THE DEMAND COMING THERE? OR WHERE ARE YOU SEEING THE MOST DEMAND AROUND THE WORLD NOW?

KLEINFELD: I MEAN, IF YOU GENERALLY SPEAK ABOUT THE DEMAND AND NOT JUST ABOUT ALUMINUM, I'M GOING TO COME TO ALUMINUM IN A SECOND, IMF RELEASED THEIR PROJECTIONS YESTERDAY AND YOU ACTUALLY SEE THAT THEY UPPED THEIR PROJECTION FOR GDP GROWTH THIS YEAR FROM NUMBER FROM 4.6, WHICH WAS THE NUMBER IN JULY IS THE LAST TIME THEY RELEASED 4.8. CHINA IN THAT IS IN THERE WITH 10.5%. U.S. WAS 2.6. EUROPE, 1.7. GERMANY BY THE WAY IN EUROPE THAT'S THE ONLY REASON WHY EUROPE WAS UPPED TO 3.3 YOU SEE THE SAME THINGS REFLECTED ALSO IN THE ALUMINUM DEMAND SIDE. WE BELIEVE THAT ALUMINUM DEMAND IN CHINA WILL GROW BY 21% AND WE'VE SEEN INCREASED DEMAND ALSO ON OTHER MARKETS LIKE IN INDIA, LIKE THE EMERGING COUNTRIES IN SOUTHEAST ASIA. WE SEE CONTINUED DEMAND THERE

BARTIROMO: WHAT ABOUT THE DOLLAR? WHAT KIND OF IMPACT DID YOU SEE? WILL THE DOLLAR CONTINUE TO BE A HEADWIND? IN TERMS OF COMING QUARTERS THE MORE YOU PAY FOR BAUXITE, OUT OF WHICH OF COURSE ALUMINUM IS MADE, WILL THE DOLLAR WAY ON EARNINGS IN THE COMING QUARTERS, WHAT CAN YOU TELL US ABOUT THE CURRENCY ISSUE?

KLEINFELD: THAT'S THE ISSUE WE HAVE THIS YEAR-- THIS QUARTER IN THE UPSTREAM BUSINESS. WE HAD A VERY STRONG HEADWIND COMING FROM CURRENCY. THE WEAKENING OF THE DOLLAR AND STRENGTHENING OF THE AUSTRALIAN DOLLAR AND BRAZILIAN DOLLAR GIVEN THAT MOST OF OUR PRODUCTION IS THERE AND HIT US SEVERELY. AND I MEAN, WE HAVE SEEN A DAY-TO-DAY WHERE THE -- IT WAS DOLLAR IS STRENGTHENING AND STRENGTHENING. SO THAT'S ACTUALLY A GOOD THING FOR US. AND THE THING THAT WE ARE INTERESTED IN IS FAIR REFLECTION OF THE CURRENCIES. VOLATILITY IS NEVER A GOOD THING FOR OUR INDUSTRY, PERIOD.

BARTIROMO: KLAUS, I KNOW YOU HAVE TO GET ON YOUR CALL. IS THERE ANYTHING I MAY HAVE MISSED YOU WANT TO ADD YOU WILL BE TELLING ANALYSTS NOW WHEN YOU GET ON THE PHONE WITH THEM?

KLEINFELD: NO. I THINK THAT THERE IS -- I MEAN, I WOULD PERSONALLY SAY THERE'S MUTED OPTIMISM, GOOD POCKETS OF GROWTH ON MAJOR REGIONS AS WELL AS SPECIFIC END MARKETS. IF YOU LOOK AT EVEN -- EVEN IF YOU LOOK AT THE U.S., WE SEE THAT THERE ARE SOME INDUSTRIES IN THE U.S. REBOUNDING AND AEROSPACE IS ONE OF THEM WHERE THE US HAS STRONG POSITION IN. ALSO AUTOMOTIVE IS CONTINUING TO GROW. TRUCKS AND TRAILERS CONNING TO GROW. THERE IS ALSO A DECENTLY GOOD SIZED -- SLOWER RECOVERY THAN WE HAVE BEEN USED TO IN THE PAST. RECOVERY IS ON THE WAY.

BARTIROMO: IT IS ALWAYS A PLEASURE AND PRIVILEGE TO HAVE YOU ON THE PROGRAM. THANKS FOR TALKING TO US AFTER THE EARNINGS.I KNOW YOU HAVE TO GET TO A CALL. WE APPRECIATE YOUR TIME.

KLEINFELD: LIKEWISE.

BARTIROMO: WE WILL SEE YOU SOON.KLAUS KLEINFELD AND BY THE WAY ALCOA STOCK OPENED FOR TRADING. HALTED AFTER THE CLOSE ON THE NEWS OF EARNINGS. IT IS TRADING HIGHER AS YOU CAN SEE STOCK UP ALMOST 3% AFTER THE NEWS IS OUT ON EARNINGS.

About CNBC:
CNBC is the recognized world leader in business news, providing real-time financial market coverage and business information to more than 340 million homes worldwide, including more than 95 million households in the United States and Canada. The network's Business Day programming (weekdays from 5:00 a.m.-7:00 p.m. ET) is produced at CNBC's headquarters in Englewood Cliffs, N.J., and also includes reports from CNBC news bureaus worldwide. Additionally, CNBC viewers can manage their individual investment portfolios and gain additional in-depth information from on-air reports by accessing http://www.cnbc.com.

Members of the media can receive more information about CNBC and its programming on the NBC Universal Media Village Web site at http://nbcumv.com/cnbc/.