Seeking Alpha
Profile| Send Message|
( followers)  

Rusal, the world's largest Aluminum producer returned back to profit for the 12 months ending on Dec 31, 2009. This is the bellwether of bellwethers, as any insight into what Alcoa (AA) will report is a big huge gift to all investors. As you may all know Alcoa is the first large U.S. company to report earnings, and will do so after the bell today; it also sets the precedent for what other companies will report.

Aluminum demand is up globally and Rusal has indicated they want to increase global capacity 3% this year, citing increased demand from Europe. This is huge news as Aluminum production uses a lot of energy to produce and beginning to restart smelters bodes very well for the pricing of aluminum and a lot of other metals (platinum group metals, iron ore, and copper) to name a few.

This morning prices for Rhodium hit the highest since October 2008, when the global market went into cardiac arrest. Rhodium is an important indicator since it's a platinum group metal used in autocatalysts, which is reflective of industrial demand; however its demand is based from fundamentals since only manufacturers can buy it. Basically there is no secondary market for Rhodium, no ETF, unlike Platinum (PPLT). That means not as much speculation, for all arguments sake, NO SPECULATION. What you see in pricing represents real demand.

And that is the Global story, real demand is picking up and U.S. Multinationals with exposure to sales in the developing nations will do very well in the next couple of weeks. Investors should be cautious as valuations are frothy, so pick your stocks accordingly and inch up your stop losses if you're getting in now.

Disclosure: No positions in companies and/or metals mentioned in this article.

Source: Earnings Season Kicks Off - Looking Towards the Bellwethers