Jorge M. Beristain, Managing Director at Deutsche Bank Securities Inc., says he thinks Alcoa Inc’s (AA) acquisition of RTI International Metals makes perfect sense. He says it complements Alcoa’s existing titanium business and helps them integrate back into raw material.
“Companies are trying to move themselves away from China in the sense that you don’t want to be competing head to head even in processed commodity supply right now,” Beristain says. “However, if you’re able to move a bit further downstream perhaps into titanium, which is much more of a technologically driven metal, then you are able to maintain margins and still hold the line on pricing and get away from head-to-head competition with China.”
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Beristain says he expects to see synergies between the companies’ foundry and casting operations.
“And it just generally continues to diversify Alcoa a bit further downstream and gets them just that one step closer to the end-aerospace clients,” he says.
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