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Ormet expects aluminum prices to rise

Keywords: Tags  Ormet, Public Utilities Commission of Ohio, Wayzata, Smelter Acquisition, American Electric Power, AEP, aluminum prices, LME Midwest premium


CHICAGO — Ormet Corp. expects aluminum prices to rise as it returns to full capacity at its Hannibal, Ohio, smelter in the coming years, according to details previously redacted from a business plan filed with Ohio regulators.

The bankrupt Hannibal, Ohio-based aluminum producer said in the plan that it expects London Metal Exchange cash aluminum prices to average $2,300 per tonne ($1.04 per pound) in 2014 and $2,400 per tonne ($1.09 per pound) in 2015, according to documents filed Aug. 30 with the Public Utilities Commission of Ohio.

Ormet, citing third-party data, also contended that aluminum prices tend to peak above $3,200 per tonne and to bottom below $2,000 per tonne, with tags historically averaging $2,650 per tonne. The plan also assumes a Midwest premium of 12 cents per pound with a $70 per tonne (3.2 cents per pound) discount for off-grade material.

Ormet couldn’t be reached for comment Sept. 3 on whether some of the assumptions in the business plan were still being used.

Current aluminum prices and premiums are below those in Ormet’s forecast.

The primary aluminum cash contract ended the LME’s official session at $1,773 per tonne (80.4 cents per pound) Sept. 3, down 16.5 percent from a 2013 high of $2,123 per tonne (96.3 cents per pound) Feb. 15. AMM’s Midwest premium currently stands at 10.5 to 11 cents per pound.

Ormet expects to be operating all six potlines at its Hannibal smelter by August 2014 at an annual run rate of 271,000 tonnes, and expects to access power on the open market in 2014 and 2015. Wayzata, Minn.-based Wayzata Investment Partners LLC also should be delivering power to Ormet from a 540-megawatt dual-cycle natural gas fired facility at a cost of $40 per megawatt hour by 2016, according to the plan.

Ormet, which was sold in June to Smelter Acquisition LLC, a subsidiary of Wayzata ( amm.com, June 4), filed for Chapter 11 bankruptcy protection in February, citing high power and legacy costs ( amm.com, Feb. 26).

The company has said it needs a better power deal to close the sale ( amm.com, Aug. 19).


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