Aluminum Companies Rise On Chinese Power Tariff (AA, CENX, DJI)

Alcoa AA and Century Aluminum CENX rose on heavy volume today on hopes that aluminum prices will rise in the near future. The catalyst was speculation that rises in Chinese electrical prices would reduce the global supply of the metal. Alcoa rose 34 cents, or 2.73%, to $12.80 while Century rose 62 cents, or 5.14%, to $12.69. These moves come despite a weak market overall that saw the Dow Jones Industrial Average (DJI) shed 1.05%. China said through a posting on the National Development and Reform Commission's website that it will raise power tariff surcharges for some energy intensive businesses by 50 to 100 percent from June 1. The affected industries are aluminum, steel, zinc, ferralloy, calcium carbide and sodium hyrdoxide. A rise in power prices could curtail some Chinese production of aluminum as smelters are shut down. Alcoa attracted two large options trades today. One was a call spread that involved the $12 and $16 October calls. The trader purchased the $12 calls and sold the $16 calls with the hopes of seeing the stock go to $16 or higher. Another trade was the purchase of June $14 call strikes. The June $14 call strikes traded 57,234 times today.