This report is an updated version of the report published on 8 October 2025 at 12:51 PM AEDT.

Alcoa Corporation (ASX: AAI) 

Alcoa Corporation (ASX: AAI) is a global producer of bauxite, alumina, and aluminum, with operations spanning mining, refining, smelting, and energy generation.

Recommendation Rationale – SELL at AUD 53.74

• Kwinana Refinery Closure: Alcoa plans to permanently close its Kwinana alumina refinery due to facility age, high operating costs, challenging market conditions and bauxite grade issues, resulting in the loss of a major production asset with 2.2mn metric tons annual capacity. The closure will cost approximately USD 890mn in restructuring charges and impact around 220 jobs by 2026.
• Earnings Weaken on Lower Prices: Revenue declined to USD 3,018mn in 2QFY25 from USD 3,369mn in 1QFY25. Net income attributable to Alcoa Corporation decreased to USD 164mn in 2QFY25 from USD 548mn in 1QFY25. The decline was primarily due to lower alumina and aluminum prices and higher U.S. tariff costs on Canadian imports during the quarter.
• Technical Standpoint: AAI’s share price is trading close to its R2 level, recommended on 14 July 2025. Also, the momentum oscillatory (14-day RSI is around 65.31 level), is approaching overbought territory. This shows increasing likelihood of near-term consolidation or technical pullback.
• Overvalued Multiples: On a forward 12-month basis - key valuation multiples (EV/EBITDA, Price/Earnings and Price/Cash Flow) are higher than median of the metals & mining sector.

AAI Daily Chart

Valuation Methodology: P/E Relative Valuation Approach (FY Dec'26E) (Illustrative)

Given the plans to permanently close its Kwinana alumina refinery due to high operating costs, challenging market conditions and bauxite grade issues, QoQ decline in 2QFY25 revenue, lower alumina and aluminum prices, higher U.S. tariff costs on Canadian imports etc., the stock might trade at a slight discount to its peers. For valuation, few peers like Fortescue Ltd (ASX: FMG), South32 Ltd (ASX: S32), and BHP Group Ltd (ASX: BHP) have been considered.

Considering that the stock is trading close to its R2 level, macroeconomic uncertainty, share price movement, current trading level, and risks associated, the share price can face consolidation at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current market price of AUD 53.74, at 12:23 PM AEDT, as of 8 October 2025.

Note: This report may be updated with details around fundamental and technical analysis, price/ chart in due course, as appropriate.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 8 October 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.    

Note 4: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Note 5: Dividend Yield may vary as per the stock price movement

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.