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CORRECTED-Novelis forced to import aluminum can sheet due to Kentucky mill outage
February 9, 2015 / 5:21 PM / 3 years ago

CORRECTED-Novelis forced to import aluminum can sheet due to Kentucky mill outage

(Corrects to show fourth quarter ends in March, not December, paragraph 5)

NEW YORK, Feb 9 (Reuters) - Novelis Inc was forced to import aluminum can sheet from Asia and South America to make up for lost output from a three-week outage at its U.S. joint venture rolling mill in January, Chief Executive Officer Phil Martens said on Monday.

The mill, which Novelis co-owns with Tri Arrows Aluminun, lost 20,000-25,000 tonnes of can sheet, Martens said in a conference call after the release of third-quarter to end-December results for the world’s No. 1 flat-rolled products maker.

“We weren’t producing sheet for a time there,” Martens said. During the outage, the company ran the mill with just one motor at 30 percent capacity.

Novelis brought in can sheet from its own operations in Asia and South America after the Russellville, Kentucky-based Logan Aluminum mill’s “unexpected” outage between Dec. 29 and Jan. 17, Martens said.

Earlier, Novelis warned that earnings growth in the fourth quarter to end-March will be tempered by negative currency headwinds in Europe, challenging pricing dynamics in Asia, and reduced production at Logan.

In the call, Martens said the company expects to make up for the lost production with incremental production increases in February and March.

Can sheet shipments accounted for two-thirds of Novelis’ flat rolled products shipments in the fiscal year 2014.

While the outage is small compared with the global market of million of tonnes, news of the output cut may provide some relief to the can sheet market which remains in oversupply as consumption from beverage can makers slows because of waning demand for fizzy drinks.

In the long term, sheet makers expect automotive demand to increase as automakers like Ford use more aluminum in car and truck bodies to help them comply with tougher fuel economy standards.

Over the past year, Novelis has been reallocating can sheet capacity to make sheet for the automotive industry.

Martens said on Monday aluminum demand from the North American beverage can market was slightly stronger in the third quarter than the company had initially expected, though this may be short-lived.

“There are clearly signs in the marketplace that market demand is continuing to go down a little bit more significantly than we thought,” he said.

Novelis reported net income of $46 million in the third quarter, up from $13 million in the same period the prior year, driven by an increase in shipments of rolled aluminum products. (Reporting By Luc Cohen; Editing by Grant McCool)

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