Alcoa 1999 Annual Report Download - page 29

LME Warehouse Producers
*as of 10/99
*
5
4
3
2
1
Worldwide Aluminum Ingot Inventory
millions of metric tons
999897969594939291908988
Alcoa
Metals Week
999897969594939291908988
1.25
.75
.50
1.00
Average Ingot Prices
per pound
9594 96 97 98 99 00E
Worldwide Demand for Alumina
millions of metric tons
40
50
30
20
10
Total imports into CIS and China
Non-metallurgical alumina
Smelter-grade alumina
Source: CRU
Source: U.S. Census Bureau C-50,
National Association of Home Builders
150
125
100
75
U.S. Repair & Remodeling Expenditures
billions of dollars
00E 98 96 94 92 90 88
9594 96 97 98 99
Alcoa Alumina Production
millions of metric tons
12
14
10
8
27
Alcoa Segments that sell
products to this market:
- primary metals
• Alcoa will restart 200,000
mtpy of primary aluminum
capacity in 2000; 250,000
mtpy remain idle.
• Worldwide primary aluminum
capacity is estimated at 25.4
million mtpy (James F. King),
including 3.2 million mtpy
capacity owned by Alcoa.
• Aluminum ingot is an interna-
tionally produced, priced
and traded commodity whose
principal trading market is
the London Metal Exchange,
or LME.
• Alcoa produces aluminum
ingot primarily for further
fabrication into higher value
products. Ingot shipments to
third parties in 1999 were 32%
of total aluminum shipments.
ALUMINUM INGOT $2.2 BILLION (13%)
Alcoa Segments that sell
products to this market:
- flat-rolled products
- engineered products
- other
• Alcoa’s revenues in this market
are from an array of fabricated
aluminum products for com-
mercial and residential applica-
tions plus vinyl siding for
new homes and remodeling.
• Repair and remodeling expen-
ditures in the U.S. are projected
to grow 4-5% a year through
2005. With broad product lines,
Alcoa Building Products (ABP)
is a leader in this segment. The
introduction in 1999 of two
new high-end vinyl siding
panels strengthened ABP’s
position.
• The National Association
of Home Builders, the U.S.
Conference of Mayors, and
HUD have set a goal to build
a million affordable housing
units in central cities and
inner suburbs. As a lower cost,
maintenance-free cladding
material, vinyl siding is posi-
tioned to play a prominent
role in this effort.
• The growth of Alcoa’s
Kawneer Company architec-
tural products in Europe
outpaced the growth of
the commercial construction
market as a whole.
BUILDING AND CONSTRUCTION $2.2 BILLION (13%)
Alcoa Segments that sell
products to this market:
- alumina and chemicals
• Alcoa is the world’s largest
producer of alumina, the white,
powdery substance refined
from bauxite ore. Alumina is
used to produce aluminum
and alumina-based chemicals.
• World alumina supplies were
tightened in 1999 by an explo-
sion July 5 that disabled Kaiser’s
1 million mtpy Gramercy, La.
refinery. Partially offsetting
this shortfall, the Wagerup,
Western Australia refinery of
Alcoa World Alumina and
Chemicals came on stream
in July with 440,000 mtpy of
additional capacity.
• In 1999 Alcoa World Alumina
and Chemicals sold about
53% of consolidated alumina
production to third parties.
• European steel producers are
operating at maximum capacity,
and some are forecasting pro-
duction records for 2000. Alcoa
Industrial Chemicals’ alumina
refractory products used to line
steel furnaces are in a position
to benefit from this market
growth.
ALUMINA AND CHEMICALS $1.8 BILLION (11%)