CRU aluminum news roundup

The projection excludes any impact from the planned acquisition of a casting and hot rolling mill in Shandong province, eastern China, from long-term partner, the Shandong Innovation Group. Closure is anticipated to occur soon. As for market challenges, President and CEO Jorgen Rosengren said: “We aim to continue to offset price pressure and wage inflation with cost reduction and productivity improvement, but expect currency exchange rates to be unfavorable compared to the fourth quarter last year.”

Looking back on Q3, he commented: “We saw good demand in HVAC [heating, ventilation and air conditioning], specialty packaging, and other niche markets, which last year were affected by excess inventory. On the other hand, demand from automotive customers weakened noticeably after the [Northern Hemisphere] summer.”

Overall, shipments were 122,700 mt – an increase of 6.7% compared to last year’s Q3. Sales revenue was 3.1% higher at SEK5.75 billion ($545 million) but net profit fell 14.4% to SEK285 million. Among other achievements, Rosengren highlighted its record-high recycling – the share of sourced recycled aluminum increased to 47.4% in Q3 from 44.4% observed last year.

Strong upstream results for Hydro in Q3 partly offset by weak downstream business

Norsk Hydro released its Q3’24 results. The Norwegian producer posted an adjusted EBITDA of NOK7.367 billion ($673 million), up 88% year over year (y/y) and up 26% quarter over quarter (q/q). As for the unadjusted EBITDA, it came in lower at NOK5.934 billion amid impairment charges of NOK581 million for Hydro Energy and a total of NOK913 million in unrealized losses related to LME contracts for the group.  The adjusted EBITDA was positively impacted by higher aluminum and alumina prices, lower raw material costs, and positive currency effects. This was partly offset by lower recycling margins, extrusions volumes, and energy prices.

The adjusted EBITDA for its primary metal division was at NOK3.234 billion – up 134% y/y and up 28% q/q. Results were driven by higher all-in metal prices and reduced carbon costs, partly offset by higher alumina costs, and inflation on fixed cost.

Primary production was 511,000 mt, up from 507,000 mt in the previous quarter; while sales of 531,000 mt were lower by 53,000 mt from Q2. The all-in price, including the premium, was up $109/mt from the last quarter at $2,851/mt and up $273/mt from last year. The implied all-in primary cost was itself down $100/mt from last quarter at $2,200/mt and stable from last year.

Hydro said that for Q4 it expected higher raw material costs and seasonally higher fixed costs. It also said it had around 71% of its primary production for Q4 priced at $2,445/mt and 42% of premiums booked at $507/mt. 

Hydro’s results for its extrusions segment continued to be lower both y/y and q/q. The adjusted EBITDA of NOK879 billion was down 33% y/y and down 34% q/q. Hydro also said its results were down on lower sales volumes, lower recycling margins, and higher costs, partly offset by higher sales margins and strict cost measures.

As for its end-use markets, sales in automotive were down 14% y/y and sales to transport were down as much as 24% y/y. Meanwhile, sales to building and construction (32% of total sales) recovered to a 2% y/y growth. As for its outlook for Q4, Hydro pointed to higher sales margins offset by lower sales volumes and recycling margins, higher variable costs, and continued soft extrusions markets.

The adjusted EBITDA for Hydro’s Metal Markets segment – which includes the recycling activities – came in at NOK277 million, down 51% y/y and down 10% q/q. Meanwhile, recycling production was down 32,000 mt q/q to 170,000 mt amid a drop of 52,000 mt in sales. The company expects lower volumes and continued margin pressure for recyclers in the current quarter.

Commenting on the results, President and CEO, Eivind Kallevik said: “The positive development in our upstream revenue drivers continued in the third quarter, supporting strong results in our upstream business, countering the overall effects of the challenging downstream market.”

He added: “The downstream aluminum market continued to be challenged by weak demand and recycling margins in Europe and North America.”

He also noted that automotive extrusion demand remains weak due to low electrical vehicle sales in Europe, especially in Germany.

“Building and construction, and industrial demand continues to be moderate with potential 2025 support from lower interest rates. Low activity in these markets limits aluminium scrap supply, squeezing recycling margins and reducing remelt production in both Hydro Extrusions and Metal Markets,” he concluded.

Editor’s note: This article was first published by CRU. To learn more about CRU’s services, click here.