Aluminum prices that have plunged in the past year are driving down stock prices for Alcoa (ticker: AA), Rio Tinto (RIO) and other companies that smelt the metal.

While the companies have already started to cut production, they’re going to have to reduce output further to return to profitability, as demand isn’t expected to rise any time soon, analysts say.

Aluminum prices on the London Metals Exchange have fallen about 20 percent in the past year as global demand slows. China’s slowing economy has led the drop, as it has in many commodities — Beijing’s gross domestic product was its lowest rate in 25 years.

“The price in general has gone lower even though we’ve seen industrial demand and some production cuts,” says Michael Turek, a senior trader at BGC Partners, a New York-based global financial services firm. “The fact that prices continue to go lower suggests the market feels that thus far, it’s been cosmetic surgery rather than mainstream surgery.”

A strong dollar hasn’t helped the U.S. industry, as a strengthened greenback reduces purchasing power for overseas buyers. That, in turn, has led to many importers seeking Chinese supplies rather than U.S. products.

Because of its strong demand, China likely won’t cut back as much as producers in the U.S.

Weak returns for RIO and AA stock. Shares of Rio Tinto stock have plunged almost 50 percent in the past year as aluminum prices tumbled. The company says it increased production of aluminum in 2015 by 1 percent from the prior year.

Analysts at Cowen & Co. reduced their target price for the company by a third to $27, but left its “market perform” rating on the stock.

Alcoa, the largest aluminum processor in the U.S., reported a net loss of $121 million, or 15 cents a share, versus a net income of $268 million, or 21 cents a share, the prior year. The company made strategic moves last year to save $1.2 billion, exceeding the $900 million in savings it had targeted.

The company reported a $402 million positive cash flow for the year, with cash on hand of $1.9 billion, resulting in a net debt of $7.2 billion. Revenue in 2015 fell 6 percent to $22.5 billion, as lower metal prices and cost increases more than offset the company’s gains in productivity.

Alcoa is making big changes to boost its bottom line, including separating its aerospace and auto parts business from its traditional aluminum smelting business. It also plans to remove 25 percent of its smelter capacity and 20 percent of its refining capacity by slowing down production at some facilities and closing others completely.

Share prices recently hit the lowest since 2009 after the company said it will delay reductions at one of its smelters by a quarter, citing changes in material costs.

Some good news for the industry. A global aluminum deficit of 1.2 million metric tons is expected in 2016, thanks to global cutbacks in production. While supply is declining, demand may rise 6 percent this year to a record.

Global demand was forecast to double from 2010 to 2020, and thus far it’s ahead of the projection, Alcoa says.

North American producers are shipping at an average pace of about 26 billion pounds of aluminum annually, according to the Virginia-based Aluminum Association. That’s up 36 percent from 2009 and near record levels, association president Heidi Brock says.

The increase has been driven by the transportation market, including auto and aerospace, and producers have increased investments worth $2.6 billion in U.S. facilities, Brock says. “There are a lot of positive things happening in the domestic aluminum industry today, particularly in the downstream side of the business.”

Still, Brock acknowledges the “dramatic and persistent oversupply of aluminum” from China, which is driving curtailments in the U.S. Some companies have started issuing complaints about the Chinese practices.

“The (association) and the broader industry have been working aggressively to call for common sense government policy reforms to level the playing field on international trade,” Brock says.

A 7 percent decline on the first day of the year may have led some investors to believe that the Chinese government may not have as strong a grip on financial markets as many thought, Turek says.

“Markets don’t like to be confused and right now they’re confused by two things,” he says. “The markets don’t like the impression Chinese authorities gave that they didn’t have full control over their own marketplace. There’s a background of systemic risk, they have overcapacity issues, there are entire cities unpopulated — that’s all confusing the markets.”

The role of central banks. Along with China, traders are worried about recent moves by central banks globally that seemingly have different ideas on how to solve their own economic crises.

The U.S. Federal Reserve in December raised its base interest rate in a bid to stoke inflation toward the agency’s goal of 2 percent. The Bank of Japan last week stunned global markets by cutting its base rate to -0.1 percent, also in a bid to push inflation to its goal of 2 percent.

Eventually, Turek says, it’s going to come back to basics. For now, at least, he doesn’t see demand — even if it does rise to a record as Alcoa expects — to change the bearish sentiment that’s taken over the aluminum market as a whole in the past year. While he’s not extremely bearish on the market, he doesn’t expect much upside in 2016.

“In terms of pure fundamentals, (the aluminum industry) doesn’t appear to have a lot going for it,” he says. “I don’t have any major grand upside aspirations for the market. We’re going to need more production cuts, and they’re going to have to be sustainable.”

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Alcoa: Should You Buy Aluminum Stocks? originally appeared on usnews.com