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Alcoa Sets New Litho Three-Point Pricing Policy DAVENPORT, IA--August 29, 1997--
Confirming its commitment to the lithographic sheet market, Alcoa has
announced a new three-point pricing policy. Alcoa's lithographic sheet
prices now will include the cost of metal, a metal premium and a $0.65
per pound base conversion margin.
John Weaver, Alcoa's market manager - Lithographic Products, cited the
prolonged erosion of conversion margins in the marketplace as one of the
primary motivating factors behind the institution of the new pricing
policy. He stated, "Litho conversion margins are currently at a
five-year low having declined by 30%, a rate of nearly 7% annually since
Pat Hassey, president, Alcoa Aerospace/Commercial Rolled Products
business unit, reinforcing this firm, new policy said, "Litho margins
have fallen to levels which no longer support new industry capital
investment in this business segment." He added, "During the past decade,
Alcoa has invested millions of dollars into its manufacturing operations
for state-of-the-art equipment to become the highest quality, lowest
cost producer of lithographic sheet."
Under this new three-point plan, the cost-per-pound will be the cost of
metal on the London Metal Exchange (LME), plus a metal premium (based on the U.S. Midwest price
differential with the LME), plus a $0.65 per pound base conversion
margin. Mr. Weaver stated that Alcoa was taking this action to reverse
the company's declining conversion margins and reconfirm Alcoa's long
term commitment to the lithographic market.
The new lithographic sheet pricing policy is effective immediately on
all new orders and contracts. Current supply contracts will not be