CRU aluminum news roundup

Alcoa and JSW declare force majeure

Aluminum producer Alcoa has issued force majeure due to problems with shipping bauxite from Brazil. Polish metallurgical coal miner, Jastrzebska Spolka Weglowa (JSW), released a similar notification because of increased fire risk at one of its mines.

A stranded vessel has blocked the waterway serving Juruti port in Para state, northern Brazil, forcing Alcoa to halt shipments from its bauxite mine in the region. A trader said the ship has been stuck since late October, and bauxite has not been moving for around 10 days, Reuters reported.

Alcoa’s mine at Juruti last year produced 4.96 million mt of bauxite – almost two-thirds of its 7.89-million-mt/y capacity, according to CRU.

In a Warsaw Stock Exchange filing, JSW said it has issued force majeure because of increased fire risk at the KWK Pniowek underground mine. The affected area has been sealed off and around 100,000 mt of potential production will be lost. The company now expects to mine 12.35 million mt this year.

“The situation could not have been foreseen, avoided or overcome, remaining beyond the company’s control,” it added.

Novelis’s flood-hit Sierre mill ramping back up

US-based aluminum products manufacturer and recycler Novelis says its plant at Sierre, Switzerland, has partially restored production and is anticipated to return to normal during the current quarter. The mill was flooded during exceptionally heavy rain in late June. All employees were safely evacuated, but activities were suspended while damage was repaired. The cost to-date is $101 million, including extra expenditure to fulfil customer contracts, but some of this outlay is expected to be compensated by a future insurance payout.

The Sierre costs contributed to the company’s net earnings declining 18.5% year over year (y/y) to $128 million in fiscal Q2 to September, despite shipments going up 1.3% to 945,000 mt and sales revenue by 4.6% to $4.30 billion. “Our global footprint allowed us to achieve record beverage packaging shipments in the quarter and also mitigate the impact to customers from the flooding-related outage at Sierre,” said president and CEO Steve Fisher.

Though beverage sheet deliveries were up, those to some speciality end markets and automotive dispatches were down, primarily due to the Sierre flooding reducing production, Atlanta-headquartered said. Fisher also drew attention to a 63% average recycled content rate in the company’s products, which he described as a leading figure in the industry. “Our success in these areas is the result of innovative approaches and technologies, and strong relationships with our customers who increasingly demand high-recycled content, lower-carbon aluminum products,” he said.

By regions, shipments to North America were slightly up year over year (y/y) at 396,000 mt (+6,000 mt). However, shipments to Europe were down 9% y/y to 233,000 mt. Besides North America, this drop was also offset with increases in other regions. Shipments in Asia were up 13% y/y to 198,000 mt and up 12% in South America to 162,000 mt.

Century reports buoyant Q3 results

Favorable market factors and government support helped Century Aluminum overcome setbacks to post net earnings of $47.3 million in Q3, reversing a $2.5-million loss the previous quarter. But the US-based primary aluminum producer warned of a poorer performance this quarter.

“Strong global demand, continued supply-side challenges and supportive macroeconomic policy in China and the West led to rising aluminum and alumina prices in the third quarter,” said president and CEO Jesse Gary. “With bauxite and alumina supply chains facing a number of challenges around the world, we are thrilled to have our own strategic supply of bauxite and alumina from our Jamalco operations following the acquisition last year.”

Yet the passage of Hurricane Beryl through Jamaica in July provided one of the challenges that Century had to overcome in Q3. The storm damaged part of the alumina conveyor at Jamalco’s Rocky Point port. Repairs cost $6.9 million and took two months to complete. The company secured alternative port arrangements to ensure continued alumina shipments to customers.

The Chicago-headquartered company attributed the $47.3 million in net income in Q3 to recognition of tax credits and higher LME aluminum prices. In contrast, sales revenue declined 3.9% quarter over quarter (q/q) to $539 million mainly because of lower third-party alumina sales. Primary aluminum shipments were little changed at 168,800 mt, while adjusted EBITDA more than trebled to $104 million from $34.2 million. This was thanks to higher LME prices and regional premiums as well as the tax credits. But with lower LME prices and premiums ahead, Century Aluminum expects Q4 adjusted EBITDA will ease back to a range of $70 million to $80 million, despite the benefit of lower power costs.

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