Ford shares are down 6%. Why are investors reacting belatedly to the September firestorm?

Quotes of Ford Motor collapsed by more than 6% after the publication of The Wall Street Journal, drawing attention to the fact that the company needs to find a major supplier of aluminum. The Novelis plant, a supplier of aluminum sheets to the auto industry whose largest customer is Ford, burned down three weeks ago and will take until the end of the year to rebuild. Investors fear the automaker may shut down assembly lines because of metal shortages.

In trading on October 7, shares of Ford Motor collapsed by 6.1% to $11.9. The company may soon face a shortage of aluminum needed to produce cars, The Wall Street Journal reported.

Ford's main supplier, the Novelis plant in Oswego, New York, has partially burned down. It happened as early as September 16, but investors could not immediately assess the consequences of the fire. In press releases dated Sept. 30 and Oct. 6, Novelis said production would not be restored until early 2026. The delayed stock sale reduced Ford's market capitalization by about $2.3 billion, Barron's calculated.

Ford is the largest customer of the burned-out plant. The main source of the concern's profit - the Ford F-150 pickup truck - is among the vehicles that take the most aluminum to produce in the U.S. auto industry, WSJ writes.

"This is a major issue for F-150 production because that's the aluminum that comes from Oswego," aluminum industry analyst Kaustubh Chandorkar told the publication.

Ford said it is engaging with Novelis and seeking alternative suppliers to minimize potential production disruptions. The company promised an update on the impact of the conference-call fire on its third-quarter results, scheduled for Oct. 23.

Investors assume that the news will be negative: the fire may lead to supply disruption and cost increases. At the same time, lower production at a key supplier for several automakers may lead to a reduction in stocks in warehouses and higher prices, which will partially compensate for the losses.

Novelis supplies about 40% of the aluminum sheet used by the U.S. auto industry, the WSJ writes. About a dozen automakers receive aluminum from him: in addition to Ford, they are Toyota, Hyundai, Volkswagen and the manufacturer of Jeep Stellantis.

Toyota said it is working with alternative aluminum suppliers to mitigate the effects of the fire. "Our supply team has already thought of everything," a Toyota spokesperson told the WSJ. - We're in pretty good shape, but we're not completely out of the crisis yet."

Stellantis said the company is working to mitigate the potential impact of the fire on its operations. Hyundai says there will be no direct impact on production.

Novelis said it intends to tap its overseas plants to secure aluminum supplies for U.S. automakers. The company operates rolling mills in Europe, Brazil and South Korea. However, there is currently a 50 percent duty on aluminum shipments to the U.S., which dramatically increases costs for automakers.

The company said it is forging collaborations with other industry participants to increase aluminum supply and alleviate the shortage. However, industry analysts said major suppliers such as Arconic, Constellium and other companies involved in rolling aluminum for the auto industry do not have significant spare production capacity that could be quickly diverted to this segment, WSJ wrote.

This article was AI-translated and verified by a human editor