CRU aluminum news roundup

Flooding saps Novelis’ results

Despite higher turnover and shipments, US-based aluminum products manufacturer Novelis’ bottom line slipped 3.2% y/y to $151 million in fiscal Q1 to June.

A factor was the company’s plant at Sierre, Switzerland, being flooded during heavy rainfall at the end of June which halted operations. The fiscal Q1 cost was $30 million on fixed assets and $10 million on inventories.

“Additionally, we expect to incur costs related to repairs, clean-up, business interruption, and other costs related to this event until the operations are restored at the facility,” the company said. It anticipates restarting production by the end of September, with costs to total $80 million, after insurance compensation.

Atlanta-based Novelis said other factors in the lower fiscal Q1 profit were higher restructuring expenses and an unfavorable metal price lag. Sales revenue went up 2.4% y/y to $4.19 billion and shipments by 8.2% to 1,048,300 st. Shipments increased y/y in all regions, up 4.8% in North America, 5.2% in Europe and 10.2% in Asia. The company explained that the increased deliveries resulted in a return to normal demand for beverage packaging sheets following the previous year’s quarter, where customers had reduced their inventory.

USTR issues update on Section 301 tariffs related to imports from China

Last week, the Office of the US Trade Representative (USTR) issued a notice informing the public that it continued to review public comments on a proposed increase of Section 301 tariffs on various imports from China. The USTR said that it received more than 1,100 comments.

After consultation with the Section 301 committee, the USTR indicated that it would continue reviewing all comments and expected its final determination to be issued in August 2024. Furthermore, the USTR said the modifications slated for 2024 would take effect approximately two weeks after it makes the final determination public.

On May 28, the USTR proposed increasing tariffs on Chinese imports as part of Section 301, which is related to technology transfer, intellectual property, and innovation. The Aluminum Association has since discussed this announcement and said the increased duties may come sometime in the late summer or early fall.

Alcoa warns of Indonesian threat

According to Alcoa’s president and CEO, William Oplinger, the Australian government needs to keep a close eye on Indonesia’s push into the aluminum industry.

The Southeast Asian country’s promotion of its nickel industry – which began with a ban on exports of unprocessed ore in 2020 – has led to Indonesia dominating the global nickel market, depressing prices and forcing operations to shut down in Australia. Canberra needs to set its policy correctly, including putting the entire aluminum value chain, from bauxite to aluminum, on the country’s critical minerals list in order to guarantee Australia’s world-class alumina remains at the bottom of the global cost curve, Oplinger said.

While China’s attempts to curtail excess production have generally been good for producers elsewhere, Oplinger feels Australia’s aluminum industry is vulnerable to global developments. Though the Indonesian government is looking to repeat its nickel policy with aluminum, progress on applying an announced 2021 plan to ban bauxite exports has been slow. The country’s energy and mineral resources department has conceded that only one of eight planned alumina refineries had made significant progress.

Despite talk that Indonesia may relax its bauxite export ban, Oplinger argued that the Australian government should keep a close eye on developments. “It would help the government understand that there are early signs of vulnerability in the marketplace … It would certainly make it easier for us to make investment decisions,” he was quoted as saying by The Australian newspaper.

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