U.S. Aluminum Makers Find World Market a Scary Place --- Global Glut and Weak Demand Results In a Mountain of Unsold Metal
PITTSBURGH -- America's aluminum producers avoided the fate of their cousins in Big Steel by becoming global players, producing and selling metal world-wide. But their international exposure now has them running scared.</br></br>A tidal wave of aluminum exports from Russia and other former Soviet republics has squashed prices, while grinding recessions in Japan and Europe have kept demand in those markets limp. The result is a mountain of unsold metal.</br></br>Before the dust settles, some weaker companies could vanish, and even strong ones could see their balance sheets battered. Without cuts in production by the former Soviet Union, says Paul H. O'Neill, chairman of Aluminum Co. of America, "we face something like the Bataan death march: It will be long and brutal and leave lots of casualties."</br></br>Some U.S. aluminum makers, desperate to stem the flood of metal, are pondering legal action against the Russians under U.S. trade laws. And Mr. O'Neill says his company might bring trade actions against a wider range of producers. He contends that many foreign companies are selling below cost, and that if prices fall further, "many or most" will be "selling below their costs, and therefore it would be logical to bring trade action against all imports, including those from Canada."</br></br>Alcoa, the world's No. 1 producer, was alone among U.S. makers in posting a third-quarter profit -- down over 36% to $28.8 million, compared with a year earlier -- while the No. 3 producer world-wide, Reynolds Metals Co., reported its fourth consecutive quarterly loss. U.S. makers have mothballed over 600,000 tons of capacity, or about 15% of the U.S. total.