Norsk Hydro ASA said Europe’s aluminum industry, struggling with surplus capacity, still enjoys a “firm” physical market that’s reflected in the premiums paid for the lightweight metal.
“Even with the high inventory level, the physical market is still tight,” Norsk Hydro Chief Executive Officer Svein Richard Brandtzaeg said in an interview in Oslo. “That is also reflected in the premiums that we see in standard ingots in Europe.”
Aluminum producers have cut output as metal prices fell and costs increased. Hydro curtailed annual production by 60,000 metric tons, or one-third, at its Kurri Kurri smelter in Australia last month and has reduced output at its Neuss plant in Germany to 50,000 tons a year from 230,000 tons.
Premiums in Europe rose to $180 to $190 a ton last month in Rotterdam from $160 to $170 in January and are set to rise further should demand remain stable, Marco Georgiou, an analyst at CRU in London, said Feb. 23. Buyers in Japan agreed to pay higher premiums for shipments starting in April, the first increase in three quarters.