September 28, 2022

With Norsk Hydro's announcement late yesterday that two of their Norway plants will soon cut production, AEGIS now estimates that approximately 1.14 million mt, or 25.4% of Europe’s annual smelter capacity has gone offline since late 2021 due to falling demand or high electricity prices. The two Norsk plants, Karmøy and Husnes, will curtail production by a combined total of 110,000 to 130,000 mt due to falling European aluminum demand. According to the press release, the two plants will begin production cuts “shortly,” and the company expects the plants will reach new production levels by the end of 2022.

Aluminum prices have largely trended down since early August. However, further curtailments in Europe and elsewhere could begin to push prices higher. Aluminum end-users that are concerned about increasing prices could consider buying swaps or call options, as either would establish a maximum aluminum price. Such positions are standard for consumer hedging; however, they can result in opportunity costs or cash costs if metal prices decrease. Please contact AEGIS for specific strategies that fit your operations. (9/28/2022)

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Price Indications

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AEGIS Insights

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