Commodities can be great when there is a shortage and prices rise – but it becomes dangerous when the shortage ends. This is what ICL learned the first hand, which saw its stock soar a year ago when potash prices in the world soared (and then the company’s management was for some reason euphoric that it would continue – and even declared that prices would continue to rise in an interview with Bizportal) and has since written off 33% of its value. The same thing happened to the stock of the Israeli shipping company Zim, which soared due to the traffic jams and the spike in container transfer prices, and has since fallen because the prices are ‘returning to normal’ (and in this case too – it was the only one who for some reason did not anticipate this drop in prices, even though we asked the management about it once another time).
But this does not only happen in the field of potash or shipping, but also in the field of aluminum, for example. Alcoa stock
ALCOA
-4.7%
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opening:51.14
High:53.14
low:50.36
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one of the largest aluminum producers in the world, is losing ground today in trading after reporting lower prices for aluminum products at the end of 2022. Still, the question is what to expect for the coming year.
The company reported that revenues in the fourth quarter decreased by 20% compared to last year, this is because of the 35% drop in prices. Aluminum prices have fallen sharply from highs of more than $4,000 a tonne in early 2022, with futures prices now hovering around $2,600 a tonne.
But what is encouraging anyway?
However, Alcoa says it expects an increase in shipments this year. “Demand will improve from the second half of 2023 onwards. We see strong growth in demand in the automotive and packaging sectors and this makes up for the weakness in the construction industry, in certain industrial sectors and in the soft economy in Europe.”
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