Norwegian aluminium producer Norsk Hydro reported higher alumina, bauxite production after Alunorte ramp-up. The company released its Q2 report on Wednesday and shared that it benefitted from lower raw material prices and positive currency effects. Lower alumina sales prices continued to hit the Norwegian aluminium producer.
While releasing forecast for Q3, it said that raw material cost is likely to go up from Q2,2020. Alunorte production impacted by Pargonminas power interruption in Brazil in Q2 will continue to affect Hydro. Due to rescheduled maintenance, the production is expected to drop at 85-95pc of nameplate capacity at Alunorte.
Hydro reported NOK30,931mn ($3,391.99mn) revenue in Q2 2020, down by 21pc from NOK39,176mn ($4,296.16/mt) in the prior-year period. The total revenue in the first six months of the year was NOK 69,055mn as against NOK 76,759mn in H1, 2019.
The drop in lower realized alumina price $261/mt, down by 29pc from the prior-year period and the realized aluminium price at $1,579/mt, 15pc down from the prior-year period were the main reasons for the drop in the revenue.
NOK1.5bn ($0.164bn) impairment was reported in Extruded Solutions due to extrusion North America, driven by weaker growth expectations in key market segments due to COVID-19.
NOK0.5bn ($0.054bn) impairment was reported in Primary Metal. The company suffered a negative impact at Slovalco where it owns 55.3pc stakes in the plant at Ziar nad Hronom on the back of challenging profitability in weakening market environment, cost position and uncertainty on renewal of power contract.
The company’s alumina production rose to 1.44mn mt in April-June 2020 from 932,000mt in the same period the prior year.
Hydro’s primary metal production increased to 509,000mt in Q2, 2020, up by 5pc from 486,000mt in Q2, 2019. Primary metal production improved on lower material costs and positive currency costs and lower realized all in aluminium price. The company’s total aluminium production in the first half of 2020 was 1.04 mn mt, 7pc up from 971,000mt during the prior-year period.
Hydro released outlook for primary metal production and shared that 60pc of primary production will be sold at $1,530/mt rate. 55pc of premiums affecting Q3 has been booked at $260/mt as against realized expected premium at $175-225/mt.
Hydro’s re-melted metal production dropped to 88,000mt in Q2, FY20, down from 139,000mt in Q2, 2019 on the back of dropped margins. Currency and inventory valuation impacted negatively the re-melted metal production.
Rolled products sales fell to 198,000mt in Q2, 2020 from 242,000mt in Q2 2019, down by 18pc from the prior-year period. The company shared that the sales dropped on the back of lower margins the same was offset by reduced cost. The company reported improved results from Neuss smelter from lower raw material cost. Hydro shared that there will high market uncertainty and weak demand amid COVID-19 situation.
The sales volume of extruded products dropped to 224,000mt in Q2, 2020, 36pc down from the prior-year period. Hydro shared that COVID-19 situation triggered impairments in extruded solutions and primary metals.
($1= NOK 9.11)