Nov. 6--An outage at its smelter in Wales and non-cash markdowns dragged Kaiser Aluminum Corp. third-quarter earnings into the red, the company announced Wednesday.

Kaiser also said it would suspend stock buybacks to conserve cash, even though its shares are trading at the low end of their 52-week price range and the company's balance sheet remains strong. Kaiser shares closed Wednesday at $34.73, off $1.95.

Kaiser's net loss for the quarter was $22.1 million, or $1.11 per share, compared with net income of $24.8 million, or $1.24 per share, for the 2007 period. For the first nine months of the year, the company earned $39.8 million, or $1.95 per share, compared with $76.6 million, or $3.77 per share, in 2007.

A $43.8 million markdown of its metal price hedges accounted for most of the damage to operating income, said Chairman Jack Hockema. Impaired production at Anglesey while damage from a June fire is repaired cost Kaiser another $20 million, although insurance is expected to eventually cover that loss, he said.

He said the Trentwood rolling mill in Spokane Valley has been operating at less than full capacity because distributors and their customers are aggressively drawing down inventory of aluminum products in response to the economic slowdown. Demand for aerospace and defense products such as armor remain strong, he said, adding that sales of heat-treat products from Trentwood should reach record levels this quarter.

Hockema said 36 employees laid off last month were rehired with the expectation plant operations would be closer to full capacity. New equipment installed as part of a $140 million upgrade at Trentwood has performed as expected, he said.

"The long-term fundamentals of our business do remain positive," Hockema said. "In the near term, we face unprecedented uncertainty."

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