Noranda Aluminum (NOR) -4.2% AH after announcing a secondary public offering of 10M common shares by Apollo Global Management; NOR will receive no proceeds from the offering.
NOR also discloses that extraordinary weather production disruptions may result in a $0.03-$0.04 increase in integrated cash cost per pound during Q1 vs. prior expectations; the New Madrid and Gramercy facilities have resumed normal operations after severe winter weather hurt production in January and February.
"Given the pace and amount at which premiums have recently increased, it is clearly difficult to forecast for how long they will remain near current levels which we believe provide a significant amount of earnings support to [Alcoa]’s primary aluminum smelting operations," the firm writes.
The firm upgrades AA shares to Overweight from Neutral with a $15 price target, up from $9, and raises Century Aluminum (CENX +5.3%) to Overweight from Underweight with a $13 target, up from $6.
The WSJ shines a light onto "shadow warehouses," a hidden system of facilities that store tens of millions of tons of aluminum, copper, nickel and zinc across the globe for banks, hedge funds and commodity merchants.
The warehouses operate outside the London Metal Exchange's system, are unregulated, and don't provide details of their holdings. As a result, it's unclear how much metal is held in the shadow system. This lack of visibility could cause major price swings.
The WSJ article follows allegations that warehousing companies have artificially boosted the price of metals, particularly aluminum.
Companies that operate metals warehouses include Goldman Sachs (GS), Glencore Xstrata (GLCNF) and JPMorgan (JPM), although the latter is looking to sell its commodities unit.
Alcoa (AA -7.2%) shares tumble as the LME reveals final rules designed to speed the delivery of metal out of its global warehousing network.
The LME's rule essentially would force warehouses that are home to long waits for metal to deliver out more metal than they take in, a move analysts say could speed the flow of aluminum out of warehouses and pressure prices lower.
Alcoa, which had criticized proposed changes, now voices support for a "more transparent marketplace" while calling on the exchange to give a clear outline on when it plans to implement the new rules.