Norwegian aluminium maker Norsk Hydro earned less than analysts expected in the third quarter, although profit rose sharply from a year earlier. It warned that its smelters face higher costs and lower metal premiums in the fourth quarter.
At a glance
- Adjusted EBITDA rose 51.6% to 9.09 billion Norwegian crowns, below the 9.53 billion analysts expected.
- Hydro expects the premium it earns above benchmark aluminium prices to fall to $550-600 a tonne.
- Gas problems at its Alunorte refinery in Brazil will cost $90-110 million in the fourth quarter.
Background
Norsk Hydro is a Norwegian aluminium producer that also refines alumina, including at the Alunorte refinery in Brazil. Aluminium buyers pay a benchmark price set on the London Metal Exchange plus a regional premium, which rises when local supply is tight. Alumina is the white powder refined from bauxite that smelters turn into aluminium metal. EBITDA means earnings before interest, tax, depreciation and amortisation.
What happened
Norsk Hydro's adjusted EBITDA rose 51.6% from a year earlier to 9.09 billion Norwegian crowns ($974.3 million) in the third quarter, Reuters reported on October 23. That missed the 9.53 billion crowns analysts expected in a company-compiled poll.
The company warned that its smelting business expects higher costs and lower realised prices in the fourth quarter. It expects the premium above benchmark aluminium prices to fall to $550-600 a tonne, from $673 in the third quarter.
Why costs are rising
Hydro expects carbon costs at its smelters to rise by 250 million to 350 million crowns from the third quarter. Alumina costs should rise by 100 million to 200 million crowns and fixed costs by 150 million to 250 million crowns, though sales volumes should be higher.
Its Alunorte alumina refinery in Brazil is back at full production after gas supply problems. Hydro still expects a $90-110 million hit in the fourth quarter from buying gas above contract prices, after an $85 million hit in the third quarter.
What it means
Disruption to Gulf aluminium supply has lifted the premiums European buyers pay, which helped Hydro this year. Hydro is restarting smelting capacity in Slovakia and investing in Norwegian aluminium for Europe's power grids, while cutting its 2026 capital spending forecast by 1 billion crowns to 12.5 billion.
Our read
Outlook: neutral. Hydro expects higher sales volumes and a smaller premium, which points to easing tightness in Europe rather than a change in global aluminium supply.
What to watch
- The European aluminium premium, which Hydro expects to fall in the fourth quarter.
- Gas supply costs at the Alunorte refinery in Brazil.
- Progress on restarting smelting capacity in Slovakia.
For information only, not investment advice.
Aluminium price in India
metalscost.com India reference price as of 2026-11-01.
Detailed analysis
Timeline
- 2026-10-23: Norsk Hydro reports third-quarter results and warns of higher smelting costs.
Supply Drivers
Gulf supply disruption has kept European aluminium premiums high, though Hydro expects them to ease.
Refinery Output
Alunorte is back to full alumina production, but buying gas above contract prices still costs Hydro money.
What could lift prices
- Rising carbon, alumina and fixed costs make aluminium more expensive to produce.
- Gulf supply disruption is still keeping European premiums well above past levels.
What could weigh on prices
- Hydro expects its premium to fall from $673 to $550-600 a tonne.
- Expanding alumina production in China and Indonesia is weighing on alumina prices.
Country impact
| Country | Impact | Reason |
|---|---|---|
| Norway | Medium | Norsk Hydro's smelters face higher carbon, alumina and fixed costs in the fourth quarter. |
| Brazil | Medium | Gas supply problems at the Alunorte refinery are costing Hydro up to $110 million. |
Industry impact
| Industry | Effect | Reason |
|---|---|---|
| Aluminium Smelting | Negative | Carbon, alumina and fixed costs are all set to rise in the fourth quarter. |
Who gains, who loses
- European aluminium buyers: Hydro expects the regional premium they pay to fall in the fourth quarter.
- Norsk Hydro shareholders: Profit missed forecasts and the company expects higher costs ahead.
Other ways this could play out
- If Gulf supply stays disrupted, European premiums could hold up better than Hydro expects.
- If gas costs in Brazil stay high, fourth-quarter earnings could fall further.
Price risks
- Aluminium prices depend mainly on Chinese output, not on one European producer.
- A restart of Gulf smelters would ease European premiums faster.
Technical view
Price is mixed relative to its 20-period and 50-period moving averages, showing no clear trend alignment.
Computed from metalscost.com's own stored price history.
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