Alcoa (NYSE:AA) rose on Tuesday after the largest U.S. aluminum producer reached a new supply deal with Ford Motor (NYSE:F), the second-largest U.S. automaker.
Shares of Alcoa rose 2.2% to $9.59 at 1:23 p.m. in New York.
The two companies said in a statement late on Monday that Ford will begin in the fourth quarter to use multiple components in its high-selling F-150 pickup model made from an advanced Alcoa aluminum alloy that is as tough enough to replace steel parts yet significantly lighter.
The deal with Ford is a high-profile first for Alcoa's new Micromill process, as Ford's F-Series pickup trucks have been the best-selling model in the United States since 1982.
The full-size pickup truck is a key profit generator for Ford.
Automakers have been looking for lighter aluminum alloys to replace high-strength steel, which is far heavier. Lighter aluminum alloys would enable them to build vehicles that burn less fuel but meet safety standards.
Micromill allows Alcoa to cast molten metal straight onto a conveyor belt where it is flattened into coils that are sold to the auto industry. Currently, aluminum makers have to first cast the metal into slabs before rolling the slabs into coils.