Personal Finance

Why Constellium NV's Shares Popped 15% Today

A metal foundry in use.

What happened

Shares of aluminum maker Constellium NV (NYSE: CSTM) jumped as much 14.6% in trading Monday after speculation emerged that China could cut aluminum output. At 3 p.m. EST shares had slipped slightly from their high but were still up 9% on the day.

So what

Reutersissued a report that China is "considering forcing steel and aluminum producers to cut more output" as part of a broad effort to reduce smog in Beijing. There's no final ruling yet, but the early reports say that China's total aluminum output could fall by 17%, according to Reuters.

A metal foundry in use.

Image source: Getty Images.

China has long been an overhang for U.S. materials manufacturers as the country produced more and more aluminum and steel for exports. And companies like Constellium have been looking for ways to reduce the pressure, particularly by pushing for tariffs on Chinese imports. Ironically, China's own industrial waste may be driving production down by itself.

Now what

Right now, this is all speculation, but metals stocks have been reacting strongly to rumors of tariffs or Chinese cutbacks for years now. Before reading too much into this, I would like to see more bottom line improvement and/or actual cuts in Chinese aluminum production. Until then, this will be a speculative bounce that isn't worth jumping on. With that said, keep an eye out for whether or not the driver of this speculation becomes more concrete in the coming week.

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Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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