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Noranda posts 2013 net loss on LME’s fall

Keywords: Tags  Noranda, Layle Smith, earnings results, aluminum prices, Midwest premium, London Metal Exchange, LME, Michael Cowden


CHICAGO — Noranda Aluminum Holding Corp. plunged into the red in 2013 amid low aluminum prices and higher natural gas and electricity costs.

Heavy customer destocking in the fourth quarter also hurt the company’s flat-rolled business, the Franklin, Tenn.-based aluminum producer said in statement on its earnings data Feb. 19.

But the demand outlook for aluminum products is favorable, a trend that should support sales volumes and product premiums, Noranda president and chief executive officer Layle K. "Kip" Smith said in statement.

"We continue to believe in the industry’s long-term fundamentals despite continuing low (London Metal Exchange) prices," he said, adding that the company was "committed to the actions necessary to create a sustainable cost structure."

Most recently those actions have included company-wide layoffs (amm.com, Dec. 17) and a petition to reduce the power rate for its 260,000-tonne per year smelter in New Madrid, Mo. The company has said it will lay off more workers and could shut the smelter if it doesn’t receive a lower rate (amm.com, Feb. 13).

Lower aluminum prices took a $49.5-million bite out of profits in 2013, while higher natural gas and electricity tags cost another $33.5 million, Noranda said.

The big losses come as LME metal prices have collapsed over the past year. The cash aluminum contract ended the London Metal Exchange’s official session Feb. 19 at $1,726.50 per tonne, down 16.8 percent from $2,075.50 per tonne on the same day last year.

But Noranda has seen average Midwest transaction prices per pound of product shipped fall less, averaging 95 cents in 2013 vs. $1.01 in 2012. That figure was 90 cents in the fourth quarter of 2013, off 10.9 percent from $1.01 in the year-ago quarter.

High regional premiums, including the Midwest premium, have helped to bolster all-in metal costs (amm.com, Feb. 6).

While average prices were lower, volumes gained. The company’s primary aluminum business shipped 589.2 million pounds in 2013, up nearly 3 percent from 572.3 million pounds in 2012. For the quarter, Noranda shipped 150.5 million pounds of primary aluminum, up 3.7 percent from 145.1 million pounds in the fourth quarter of 2012.


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