Despite Production Drop, Century Reports 21 Percent Rise In Primary Aluminium Sales

Despite Production Drop, Century Reports 21 Percent Rise In Primary Aluminium Sales

American aluminium smelter Century Aluminum reported second-quarter results on Wednesday, with financials generally improved across the board despite a quarter-on-quarter drop in production.

Century shipped 180,220 metric tons in the quarter, down from the first quarter’s total shipments of 187,238 metric tons. Second-quarter net sales totaled US$470.0 million, up 3 percent quarter-on-quarter from last quarter’s total of US$454.5 million. Century’s second-quarter sales rise was accomplished in the face of a drop in production volume at the Sebree smelter, which was the result of equipment failure.

In the second quarter Century reported a net income of US$19.4 million, a reversal from the prior quarter’s net loss of US$300 thousand. Though an improvement, net income suffered from equipment failures costing US$8.5 million at the Sebree smelter, and US$3 million in costs incurred in conjunction with the Hawesville restart.

Adjusted Net Income in the quarter came to US$30.9 million, also an improvement over the firm’s Q1 loss of US$3.5 million. Adjusted EBITA in the quarter totaled US$54.5 million, a quarter-on-quarter improvement from Q1’s total of US$21.8 million. Century chalks up the improvement to corresponding price rises at the LME and regionally, and a fall in realized alumina costs.

Michael Bless, President and Chief Executive Officer, expressed his view that the aluminium industry continues to be in rebound.

“Industry conditions remain generally favorable. Downstream demand in most sectors and regions, especially in the U.S., continues to be strong, producing attractive growth in primary metal consumption. Consensus forecasts predict a global deficit for primary aluminum in 2018, despite a surplus in of nearly one million metric tons. We see this environment, buttressed by accommodative global growth, continuing for the foreseeable future.”

He continued by noting pricing improvements in the aluminium market, and credited the Trump administration with boosting investment in domestic production.

“These attractive trading conditions continue amidst some recent pricing volatility. The alumina price remains well above its fundamentally supported level due to short-term concerns over a small number of actual and potential supply disruptions. The aluminum price itself has weakened over the last two months in concert with other commodities and risk assets; given the strong fundamental global economic environment, this trend should reverse reasonably soon. In the U.S., the Section 232 relief implemented by the Trump administration has resulted in significant investment in the primary industry; we currently estimate that by the end of 2018, U.S. primary aluminum production will have increased by around 60% from 2017 levels. Given this success, we remain confident that the administration will continue to reinforce its consistent objective of supporting the restart of U.S. primary aluminum capacity and the long-term competitiveness of the industry.”

Bless closed by noting that the firm is continuing with plans to fire up both curtailed and damaged production capacity.

“In this context, we continue to move forward with the restart of our idled capacity. In June we began energizing cells in the first of the three curtailed potlines at Hawesville, and are hard at work rebuilding cells in the other two lines. We are proud that this large and complex project has thus far been successfully achieved with no significant safety incidents; the safety of our employees and contractors will continue to be our first priority. The restart project remains on schedule and within budget; it continues to represent an attractive investment for our shareholders, even in the present slightly weaker pricing environment. We have also prepared the potline at Sebree for restart after the unfortunate power equipment failure in late May, and have begun restarting these cells; we expect this process to be completed by the end of the third quarter.”