NEW YORK (Reuters) - Top global aluminum producer Alcoa Inc. (AA.N) dodged a bullet with a last-minute labor deal for 9,000 workers across 15 plants in the United States, averting the need for a threatened hard-line stance that could have included the use of replacement workers.þþThe company late on Wednesday night said it had reached a deal with the United Steelworkers, covering plants representing about one-fifth of its domestic work force. Its shares were up about 2.0 percent in Thursday afternoon trading.þþAn Alcoa spokesman said the company would not give a detailed breakdown of deal terms, leaving it instead for the union to take that information to its members.þþBMO Nesbitt Burns analyst Victor Lazarovici characterized the deal as ``potentially positive'' in a note and said it addresses the key issues raised during contract talks.þþWhatever the terms, though, analysts were quick to point out the benefits of a settlement for industries that rely on aluminum, such as can makers.þþ``It remains to be seen how much stockpiling of aluminum and cans was done in anticipation of the strike, and what volatility that might create for aluminum prices and beverage can volumes. However, we think the initial relief of avoiding aluminum shortages, which should be reflected in multiples, should outweigh any temporary earnings/fundamental disruptions,'' Banc of America Securities analyst George Staphos said in a research note.þþFor weeks, Alcoa made it clear that it would not stand by and let a strike cripple the company.þþ``We are never looking for confrontations, but must be, and are, prepared. I will not mortgage the future of the company,'' Chief Executive Alain Belda said in April of negotiations focused on rising health-care costs.þþ``We are starting to train management in operations and standby people are ready to work in the plants,'' he said. ``It's not about unions; it's about Alcoa, and we have very clear programs to operate as much as we can to minimize disruption if there is a strike.''þþThe United Steelworkers, which got authorization from members for a strike on May 17, said little on its Web site other than that it would begin to set up procedures to ratify the deal.þþThe possibility of a strike had spawned some supply concerns in the aluminum market. And while aluminum prices had fallen substantially of late along with most precious and industrial metals, traders said there were still strong long positions holding out for some negative Alcoa labor news.þþ``I think everyone was anticipating something more to the negative. And when it came out that a settlement was in place that just needed to be ratified, it (aluminum) sold off quite rapidly,'' said a New York metals dealer.þþPrices of London Metal Exchange aluminum for three-month delivery (MAL3) reached an all-time high at $3,300 per tonne in mid-May, but had slumped since. On Thursday, aluminum added to losses in the Asian market on the Alcoa labor agreement news.þþ``Once the news came out, it was a no-brainer to keep selling at that point. Was it exaggerated? Maybe. But that's why the market came back a little bit,'' the dealer added.þþLME aluminum ended Thursday at $2,605 per tonne, down $45 on the day, but up from the 2-month low at $2,530 a tonne.þþAlcoa shares were up 62 cents or 2.02 percent at $32.36 in late afternoon New York Stock Exchange trading. The stock is up about 10 percent on the year, sharply underperforming a 28 percent rise for closest competitor Alcan Inc. (AL.N) and a 14 percent rise in aluminum prices.þþ
Source: NY Times
