Alcoa Inc. (AA:US), the largest U.S. aluminum producer, agreed to additional disclosures about the risk posed by increasing global supplies of the metal after a letter from the U.S. Securities and Exchange Commission.
The New York-based company should inform investors how it would be affected by a potential “flood” of stockpiled aluminum arriving on the market, the regulator said in a March 20 letter made public in a filing today.
In an April 18 response to the SEC, also published today, Alcoa said it will include new language in its quarterly 10-Q filings explaining the risks from additional supplies and rule changes at the London Metal Exchange, the biggest aluminum marketplace.
The correspondence shows the SEC’s concern over the potential impact of millions of tons of the lightweight metal coming onto the market and depressing prices.
There are currently 5.1 million tons of aluminum stockpiled in warehouses registered with the LME, equal to about 11 percent of 2013 demand, according to data compiled by Bloomberg. As much as 80 percent of aluminum inventories may be tied up as collateral in so-called financing deal that make the metal unavailable to buyers, according to Societe Generale SA. Should those deals start to unwind, the collateralized metal may come back on to the market.
Monica Orbe, an Alcoa spokeswoman, declined to comment on the correspondence with the SEC beyond today’s filings.
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