ALCOA WAS cautiously optimistic when it said it saw signs of bottoming or stabilising in its end markets, but it continues to project weak global demand for 2009, with another 1.4 million tonnes of aluminium supply cuts in the near term.

Heavy inventory destocking throughout Alcoa’s supply chain, its customers and their customers, has pushed inventories to unsustainably low levels, and should cause a rapid pick-up in orders when the economy turns, company executives told a conference call after reporting first quarter results. “There are some signs in many of our end industries for bottoming out,” said Klaus Kleinfeld, president and chief executive officer of the world’s largest aluminium producer.

That would be a good sign for the company, which posted its second consecutive quarterly loss on Tuesday, as aluminium prices and global demand tumbled.

The Pittsburgh-based company reported a first-quarter net loss of $497 million (€374 million), or 61 cents per share, compared with a profit of $303 million, or 37 cents per share, in the same quarter of 2008. Citing 24 per cent year-on-year inventory declines at metal service centres as an example, Kleinfeld said: “We believe that is way beyond normal levels. If there is an upside, it’s that, if people start to smell the market bottoming out or coming back, there might be quite a bit of activity.”

But many sectors have also had to contend with tighter credit conditions, which has hampered their ability to operate.

Alcoa is the first company in the Dow Jones index to announce results as the US reporting season gets under way. – (Reuters)