The Truth About Chinese Aluminum Demand

NEW YORK (TheStreet) -- The media, those flailing little devils, can't seem to find an equilibrium on Alcoa(AA) and China. Here's what Reuters said in a headline:

"Alcoa trims its aluminum demand outlook for China."

Got that? Demand is falling in China. And, uh, here's what Barron's said in their headline, which ran in the exact opposite direction: "Alcoa: No China Aluminum Slowdown."

How can a trader in his right mind bridge those dueling realities? Or is this one of those bridges to nowhere? Actually, a simple use of context works. Barron's, like Marketwatch and others, fails in this regard by only trafficking in absolute growth forecasts. And it's true: in absolute terms, China aluminum demand remains robust.

Alcoa predicts aluminum consumption growth in 2012 of 11 percent. But as Reuters makes clear in its first sentence but the others neglect to mention in any sentences, "Alcoa Inc. said on Tuesday it lowered by 1 percentage point its outlook for China's aluminum consumption growth in 2012."

Indeed, Alcoa's forecasts are slowing. They are still good (and their first-quarter earnings, as we discussed yesterday, were great) but they are clearly trimming outlook demand for China.