Business area outlook for Q3 2024 as provided in the Q2 2024 presentation:

Bauxite & Alumina

• Alunorte production at nameplate capacity 
• Higher alumina price
• Flat raw material costs

Important takeaways from the Q3 2024 Earnings Call:

“We expect a relatively flat raw material costs with the positive contribution from pure switch, which is contributing to ramp-up during Q4 will be offset by increase in other raw materials. Fixed and other costs are expected to increase by NOK400 million to NOK500 million, driven by postponed spending from Q3 as well as seasonally higher maintenance costs related to Paragominas.”

Aluminium Metal

• ~ 71% of primary production for Q4 2024 priced at USD 2 445 per mt.
• ~42% of premiums affecting Q4 2024 booked at USD ~507 per mt. Q4 realized premium expected in the range of USD 380 - 430 per mt.
• Higher raw material costs
• Lower fixed costs

Important takeaways from the Q3 2024 Earnings Call:

“LME has increased since Q2 and are expected to continue to impact positively the revenue side in aluminum metal. Premiums have stabilized and are expected to remain at similar levels as Q3.
For Q4, aluminum metal has booked 71% of primary production at $2,445 per tonne, including the effect of our strategic hedging program. Furthermore, we have booked 42% of premiums affecting Q4 booked at $507 per tonne, and we expect realized premiums in the range of $380 to $430 per tonne. 
On the negative side, we expect further increase in raw material costs, driven by alumina of between NOK850 million to NOK950 million. However, as for Q3, a portion of this increase is expected to be offset by our strategic alumina hedge with a quarter-over-quarter hedge effect estimated at around NOK300 million. Carbon costs are expected to remain stable. 
However, seasonally lower fixed costs in Q3 are projected to return to normal levels in Q4, resulting in a negative quarter-over-quarter impact on NOK100 million. We also expect the sales volume to remain stable.”

Metal Markets

• Seasonally lower volume
• Continued margin pressure in the recyclers
• Lower results from sourcing and trading
• Continued volatile trading and currency effects

Important takeaways from the Q3 2024 Earnings Call:

“The outlook for Q4 continues to be challenging as we expect recycling margin continue to be squeezed on the lower scrap availability, keeping margins low. 
At the moment, the recycling margins are at an all-time low level and we expect those to return to normalized levels over time. However, as mentioned earlier, interest rate cuts may be necessary to foster positive growth in sectors like building and construction, which is an important sector, both for scrap supply and aluminum demand. For our commercial area in Q3, we expect lower contribution from sourcing and trading activity.
Again, as always, reminding of the inherent volatility of the trading and currency events. Following the latest developments, we have decided to further adjust our guiding for 2024 full year adjusted EBITDA for commercial, excluding currency and inventory valuation effects to a range of NOK700 million to NOK900 million.”

Extrusions

• Lower sales margins
• Lower sales volumes and recycling margins
• Higher variable costs
• Continued soft extrusions

Important takeaways from the Q3 2024 Earnings Call:

“Looking into Q4, we should look towards the same quarter last year to capture the seasonal developments in extrusions. Compared with last year due to continued soft extrusion markets in both Europe and North America, we expect lower sales volumes. As mentioned earlier, external sources estimate a decline on the volume year-over-year of 2% for North America and 6% for Europe. 
We also expect continued strong extrusion margins, but the remelt margins continue to be under pressure. Combined with the higher cost, we expect the negatives to be more than offset the positives in Q4 when comparing year-over-year.”

Energy

• Stable production
• Seasonally higher prices and price area differences
• Price and volume uncertainty
• Important takeaways from the Q3 2024 Earnings Call:

“Looking into Q4, as always, we should be aware of the inherent price and volume uncertainty in energy. For next quarter, production volumes are expected to be on a similar level while power prices are expected to increase with seasonality into the winter. Furthermore, we expect the price area differences results to be higher than in Q3. In Q3, we had approximately NOK 30 million in price area results."

Additional information

The latest available price and currency sensitivities for earnings (as well as information on the price time lags for revenues and costs), are included in the NHY Presentation Q3 2024.

Publicly available information regarding the market prices and currency developments in Q2

 

	Q3-24	Q2-24	QoQ	YoY
Average LME 3M market rate1)	2,421	2,565	-6%	10%
Average PAX fob Australia (USD/t) 2)	507	434	17%	51%
Energy prices3)
Nordic system NOK/MWh	234	416	-44%	-27%
NO5 NOK/MWh	212	478	-56%	8%
NO2 NOK/MWh	445	529	-16%	-33%
NO3 NOK/MWh	183	362	-49%	-6%
SE1 NOK/MWh	133	315	-58%	-43%
SE2 NOK/MWh	136	316	-57%	-42%
NO2 vs NO3 NOK/MWh	261	167	57%	-44%
Currencies4)
Average NOK/USD	10,72	10,74	0%	2%
Average NOK/BRL	1,93	2,06	-6%	-10%
Average NOK/EUR	11,76	11,57	1%	3%
Average BRL/USD	5,55	5,21	6%	14%

Please note that these figures have been updated to reflect the full 3rd quarter. 

1) Realized price in AM lags LME market rate with 1-2 months
2) Alumina prices in B&A are realized with approx. one month lag, in AM with 2-3 months lag
3) Source: Nordpool
4) Source: Norges Bank