Kaiser Aluminum plant explosion expected to disrupt production

Sep. 27, 2022 2:56 PM ETKaiser Aluminum Corporation (KALU)By: Carl Surran, SA News Editor

Billets of aluminium in the factory. The Hall–Heroult process produces aluminium with a purity of above 99%. Further purification can be done by the Hoopes process.

Funtay/iStock via Getty Images

Kaiser Aluminum (NASDAQ:KALU) is still evaluating damage at its Sherman, Texas, plant after an explosion three days ago damaged equipment, Argus reported Tuesday.

The company expects production at the plant, which makes soft alloy aluminum extrusions using scrap, will be reduced, but the extent is not yet known, according to the report.

If production is reduced for an extended period, Argus said it could hurt regional aluminum scrap prices, which already have been weighed down by falling metal futures, lower premiums and a lack of spot demand.

Kaiser Aluminum (KALU) is a "long-term play at a very decent valuation," Arie Investment Management writes in a bullish analysis published recently on Seeking Alpha.

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