OSLO (Reuters) - Norwegian metals maker Norsk Hydro said on Thursday it expects global primary aluminum demand growth to slow next year, and that the company was being impacted “heavily” by an output slowdown at a key alumina plant in Brazil.
Hydro sees aluminum demand growth slowing to 2-3 percent next year from an expected 4 percent in 2018. Trade sanctions and tariffs are impacting global flows of aluminum and increasing uncertainty over economic growth.
The company sees the primary aluminum market deficit continuing in 2019 despite slower growth forecasts. It kept its view for global aluminum demand to grow 2-3 percent a year over the next decade, with semis demand growth seen at 3 percent and recycling at 3-4 percent per year.
Hydro shares were down 1.3 percent, having opened up 1.2 percent in a broadly firmer metals sector following U.S. producer Alcoa’s 7.7 percent rise on Wednesday.
The company still has no firm timeline for the restart of full output at its Brazilian alumina plant, which has been operating at half capacity since February following a spill of untreated water.
“We are aiming to establish a common platform with authorities and the court system to have an aligned way forward towards full production, utilizing the best available technology,” Chief Executive Svein Richard Brandtzaeg said in the statement.
Alunorte, the world’s largest alumina refinery, has a capacity of about 6.3 million tonnes of alumina per year.
“All in all the situation at Alunorte is impacting us heavily. If we go back to full production that will change,” Brandtzaeg said at the presentation.
Hydro repeated it will not catch up with its program to lift operating profit by 3 billion crowns in the period 2016-2019, with planned improvements currently leaving it lagging that target by 0.5 billion crowns.
Brandtzaeg said timing for resuming full production was still uncertain, depending on the go-ahead from the Brazilian authorities and a court.
Reporting by Camilla Knudsen, Ole Petter Skonnord; Editing by Jan Harvey and Emelia Sithole-Matarise