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Century Aluminum turns alumina into aluminum metal, selling both standard-grade metal and products such as billet and foundry alloys that command additional premiums. Most revenue comes from aluminum sales, with a smaller contribution from alumina. Its interest in Jamaica’s Jamalco bauxite-mining and alumina-refining venture supplies part of the material its smelters need.
Customers pay prices based on the London Metal Exchange aluminum price, plus a regional premium and, where applicable, a product premium. Glencore and its affiliates account for most sales, and agreements cover a substantial portion of current-year production. The remaining customer base is also concentrated among a small number of buyers.
Profitability depends on the gap between those selling prices and production costs, especially electricity and alumina. Smelters need continuous power, and Century cannot simply pass higher input costs on to customers because metal prices follow the market. Its Grundartangi smelter in Iceland also operates under the EU Emissions Trading System and must obtain carbon dioxide allowances, some free and others purchased.
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Century Aluminum’s results hinge on aluminum prices and power and alumina costs; watch Glencore, which supplies alumina and buys 54% of Century’s sales.
Alcoa and Century Aluminum compete to sell standard and value-added primary aluminum, so both feel changes in London Metal Exchange aluminum prices and regional and product premiums. Watch the prices Alcoa gets from aluminum customers and traders, particularly those premiums, for a read on Century’s selling prices.
Rio Tinto competes with Century Aluminum in selling primary aluminum, but its much larger iron-ore and copper businesses make its overall results a less useful guide to Century. Watch its Aluminium & Lithium segment rather than group earnings for the closer view of its aluminum business.
Century Aluminum Co earningsThis company
Century Aluminum sells aluminum at prices tied to LME prices and regional premiums, while power and raw-material costs can eat into profit; this report will show whether higher selling prices are still lifting gross profit.
Read aluminum sales revenue alongside gross profit. If both rise, higher LME prices and regional premiums are more than covering power and raw-material costs; if revenue rises but gross profit weakens, costs or shipment mix are consuming the price benefit.
Industrial Production MoM (Oct)
Industrial production tracks output from factories, mines and utilities; for Century Aluminum, stronger customer demand can keep its smelters producing and support aluminum shipments and sales, while weaker demand can reduce them.
Stronger factory, mine and utility output points to firmer demand that may support Century Aluminum’s smelter utilization and aluminum shipments; weaker output points to softer demand that may weigh on both.
