Why the Alumina (ASX:AWC) share price is down 9% in a month

What’s been happening to send the company’s shares south?

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The Alumina Limited (ASX: AWC) share price has had a choppy walk through this year, coming off a high of $1.96 back in January.

Alumina shares are currently trading at $1.59, an almost 9% down-step from this time last month.

While there has been no market-sensitive news for the company this month, let’s take a closer look at what Alumina has been up to lately.

But first, what is Alumina?

Alumina is a resources company that has keen interests in the mining of bauxite, alumina refining and aluminium smelting.

The company has a 40% ownership of Alcoa World Alumina and Chemicals (AWAC) which stands on the podium as the largest alumina company in the western parts of the globe.

Alumina is a part of the S&P/ASX 200 Index (ASX: XJO) and has a market capitalisation of around $4.5 billion at the time of writing.

What has Alumina been up to lately?

On 16 June 2021, Alumina gave its presentation to the CRU World Aluminium Conference Series.

In the presentation, the company outlined several challenges it faces to its export operations, including:

  • Increases to production costs for alumina over 2020
  • “Abnormally high” freight costs into China that could impact import prices
  • No increase in aluminium production for Q3 and Q4 2021.
  • Supply and demand expectations for alumina to contract in 2023-24
  • Potential end of export into Indonesia by 2023 (depending on state policy there).

Following this presentation, the Alumina share price immediately slid around 6%, dropping from $1.66 to $1.57 in a week.

Investment banking giants Goldman Sachs and JP Morgan also cut their price targets for Alumina shares in late June.

On 22 June, JP Morgan trimmed its price target by 5.6% to $1.70, while Goldman cut its target by 4.8% to $2 on the nose just two days later.

Since these key events, the Alumina share price has tanked almost 9%.

Alumina share price snapshot

This year to date, the Alumina share price has fallen around 14% into the red. This extends the loss over the previous 12 months to around 5%.

The company pays a fully franked dividend of 8 cents per share with a current dividend yield of around 4.8%.

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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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