Aluminum market backwardation and global price impact (with Westin, Chrystia Freeland)

Trond Olaf Christophersen, CFO of Norsk Hydro, reports their Qatalum joint venture in Qatar is operating at 60% capacity due to the war. He notes the Asian market is worse impacted physically for supply, but the price impact is global. He describes a backwardation market with high front-month prices declining to $3,000/ton in future years.

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Norsk Hydro 2.2
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Trond Olaf Christophersen 8.5

Aluminum market backwardation and global price impact (with Westin, Chrystia Freeland)

metals

You have quite high prices in the front end... but then you have a declining price, a backwardation situation in the markets with lower prices falling down to $3,000 per ton a couple of years out in time.

Trond Olaf Christophersen

The US is a short market on primary aluminium. So the US needs to import a lot of primary aluminium to fill demand. To attract that metal, US consumers or manufacturing using aluminium in effect have to pay the duty on aluminium into the US market.
Trond Olaf Christophersen

Our joint venture in Qatar, Qatalum, has been impacted by the war and is currently operating around 60% production capacity because of the situation. We continue to operate around that level.
Trond Olaf Christophersen

The supply situation may impact the supply situation in all markets. Physically, when it comes to supply, I think the Asian markets are worse impacted because quite a lot of the metal from the Middle East is normally sold in Asia around two and a half million tons. But the price impact is global.
Trond Olaf Christophersen

In the aluminum market, we see a bit the same situation as in the energy markets where you have quite high prices in the front end, meaning metals to be delivered in the coming month. But then you have a declining price, a backwardation situation in the markets with lower prices falling down to $3,000 per ton a couple of years out in time.

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