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Why Century Aluminum Co. Shares Fell 35.5% in May

A Century Aluminum operation. Image source: Century Aluminum.

What: Century Aluminum Co.'s (NASDAQ: CENX) shares fell nearly 24% last month. However, they still ended the month up nearly 40% for the year. Needless to say, there's a lot of volatility in those numbers.

So what: The big driver for Century Aluminum this year has been, as you might expect, commodity prices. After a very long downturn, most commodity prices started to pick up in mid-January. That led to a huge rally in Century's shares that lasted through late April, with the shares rising nearly 190% over the span! So it shouldn't be too surprising that the company's stock price fell in May along with a 7% pullback in the price of aluminum.

Century Aluminum's shares started falling the day earnings were announced on April 28; competitor Alcoa's stock was up that day. It shouldn't be much of surprise that Century Aluminum, still working to align its business with the current market environment, was hit harder by the aluminum price pullback, overall. On one hand, you could argue that the nearly 24% stock price decline in May seems out of scale compared to the far more modest aluminum drop, but there's more going on. In late April, Century reported earnings. The company lost $0.19 a share, proving that, despite higher commodity prices, it was still struggling. Backing up the loss was a material drop in the volume of aluminum sold and continued commentary about the negative impact of imports.

Now what: Century Aluminum continues to work through a difficult market. As management's comments make clear, though, that work is a long way from complete. For example, Century is dealing with high cost operations in addition to competitive pressure from imports. Most investors would be better off avoiding these shares for now.

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