Alcoa (AA) Plunges 2.99% on Kwinana Closure, Q3 Earnings Hit by $890M Charges

Shares of Alcoa Corporation (NYSE: AA) fell to their lowest level since October 2025 on October 6, with an intraday decline of 2.12%. The stock has dropped 2.99% over two trading days, marking a continuation of downward momentum driven by operational and financial headwinds. The recent selloff reflects investor concerns over the company’s strategic adjustments and sector-wide challenges.

The most significant factor behind the stock’s decline is the permanent closure of Alcoa’s Kwinana alumina refinery in Western Australia. The decision, announced in late September 2025, stems from high operating costs, aging infrastructure, and weak global aluminum demand. The closure triggered $890 million in restructuring charges for Q3 2025, directly impacting earnings and raising questions about short-term profitability. Analysts note the move aligns with broader cost-cutting efforts but may limit Alcoa’s flexibility in responding to near-term market fluctuations.

Alcoa’s revised Q3 2025 outlook further pressured sentiment, as the company faces compressed margins due to reduced refining capacity and elevated energy costs. While the firm aims to offset these challenges through cost-saving measures and higher-margin products, uncertainty persists around its ability to maintain cash flow stability. The global aluminum sector remains under pressure from supply chain bottlenecks and regulatory scrutiny, compounding Alcoa’s operational risks.

Investor sentiment is divided, with some viewing the stock as near its fair value of $34.09, while others argue it is undervalued based on discounted cash flow models. The divergence highlights the complexity of Alcoa’s investment case, balancing near-term restructuring costs with long-term opportunities in low-carbon aluminum demand and innovation. Strategic initiatives, including partnerships for gallium production and a planned Investor Day on October 30, 2025, aim to clarify the company’s path to sustainable growth.

Broader market trends also weigh on Alcoa’s prospects. The aluminum industry grapples with declining demand in traditional sectors and rising raw material costs, while the green transition drives uneven demand for specialty products. Alcoa’s ability to navigate these dynamics, coupled with its upcoming Q3 earnings report and strategic updates, will be critical in determining whether the recent selloff reflects overcorrection or a realistic reassessment of its competitive position.