Alcoa shares fall as tariffs, energy costs weigh on forecast

By Sanjana Shivdas

(Reuters) - Shares of Alcoa Corp (NYSE: AA) fell 11.8 percent on Thursday a day after the aluminum producer lowered its 2018 forecast for adjusted earnings before interest, tax, depreciation and amortization (EBITDA) citing recent U.S. trade tariffs.

Alcoa, which was also hit by higher electricity costs in the quarter, said it expects a negative monthly impact between $12 million and $14 million as long as the tariffs on imported aluminum are in place.

Credit Suisse analyst Curt Woodworth said in a note that it was surprising Alcoa has not filed an exclusion request as it is currently seeing annualized headwinds of $150 million and imports about 600,000 tons of aluminum from Canada.

Alcoa, the largest aluminum producer in the United States, has also been hurt by falling prices.

Aluminum prices fell to $2,001 on Thursday, lowest since April 6, on worries about demand from the trade tussle between the U.S. and China, which accounts for around half of global industrial metals consumption.

The company however beat profit and revenue expectations on Wednesday, but said tariffs led to $15 million in costs in the reported quarter.

Alcoa's total costs and expenses rose about 21 percent to $3.17 billion during the quarter.

Up to Wednesday's close, Alcoa shares have fallen 10.9 percent year-to-date, with rival Century Aluminum Co (NASDAQ: CENX) down 24 percent during the same period.

(This version of the story corrects second paragraph to say Alcoa was hit by higher electricity costs in the quarter, not rising oil and gas prices.)

(Reporting by Sanjana Shivdas in Bengaluru; Editing by Shounak Dasgupta)

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