Europe’s Energy Crunch Threatens Aluminum Production

Oslo based aluminum company Norsk Hydro ASA issued a warning over the critical threat that Europe’s energy crisis poses to aluminum supply. The company said the series of production cutback seen so far could be doubled over the winter months. The skyrocketing energy prices have already slashed the production of around 900,000 tons of aluminum, which is one of the most energy intensive metals to make, in Europe and North America over the past two years.

As more than a third of smelters announcing losses, an additional 1 million tons of capacity is in danger over the coming months.

Hydro’s production in Norway has so far been unscathed because the company supplies energy from hydroelectric plants, but its Slovakia production is cut sharply because of surging power prices, which has made its Slovalco plant unprofitable.

While the strain on supply caused a spike in aluminum prices on the London Metal Exchange (LME) earlier this year, they’ve since fallen sharply as demand worries mount, adding to the strain on smelting margins.

The Norwegian company said the European aluminum industry, which has become smaller and smaller over the years, is facing a huge danger and risk of further industry closures.

As supply risks are growing, Norsk also signaled that the demand outlook is deteriorating fast. The company boosted shareholder returns sharply after a strong second quarter, but it warned that a five-quarter run of record results could be drawing to a close.

Norsk Hydro has increased its long-term hedging to cover a quarter of its portfolio, and stated that protecting against a further drop is prudent as the risks to demand grow. Aluminum has declined more than 12% this year on the LME.

Need to access the insight?

Start your 7-day free trial now

Need to access the insight?

Start your 7-day free trial now

Need to access the insight?

Start your 7-day free trial now

Do you need to access special insights on this matter?

Start your 7-day free trial  and become a member today

Subscribe to Top Insights Today

Subscribe to Executive Newsletter Top Insights Today

The Executive Newsletter -Top Insights Today- puts global business events in perspective through special insights

Join the ranks of global executives and subscribe to Top Insights Today

Top Insights Today covers insights on energy, clean-tech, oil&gas, mining, rare earths, defense, aviation, infrastructure, manufacturing, electrical vehicles, big-tech, finance and politics of business

By clicking subscribe you agree to our privacy and cookie policy and terms and conditions of use.

Read more insights

China to Bolster Oversight on EV Battery Supply Chain

Chinese ministry of industry and information technology said on Friday that it wants to strengthen oversight on electric vehicle (EV) battery supply chain to deal with shortages that hamper productivity and profits of EV manufacturers. The ministry said in a statement that skyrocketing demand for EVs and a complicated Covid-19 situation have left China’s battery supply chain severely unbalanced. 

China Fails to Meet Phase 1 Goal of Trade Deal with the U.S.

China has failed to meet its commitments on the Phase 1 of U.S.-China trade deal, which expired at the end of 2021, according to U.S. Trade Representative’s Office. USTR said the discussions with China is ongoing regarding the matter. 

Indonesia Close to Finalizing $14 Billion F-15 Deal with the U.S.

Indonesian defense minister Prabowo said the Southeast Asian country is awaiting a final sign-off from the government on its planned purchase of F-15 fighter jets from the United States. Prabowo said after the meeting with his U.S. counterpart Austin in Jakarta that Boeing had agreed to the financial offer proposed and he was confident the package was affordable. “The decision now is with the Indonesian government… Negotiations have advanced very well,” he added. 

Stay informed

error: This content is protected !!