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UPDATE 1-Novelis forced to import aluminum sheet due to Kentucky outage
February 9, 2015 / 6:21 PM / in 3 years

UPDATE 1-Novelis forced to import aluminum sheet due to Kentucky outage

(Adds details from interview on Logan mill, price forecasts, paragraphs 10-12)

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.

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.

This may lead Novelis to switch some of the Logan mill’s capacity toward auto sheet, though Martens said there were currently no expansion plans.

“As we look at the next wave of how we might supply the auto industry, we would look at how we might utilize Logan differently,” Martens said in an interview.

Martens said he expected three-month aluminum on the London Metal Exchange to remain little changed around $1,850 through 2015, and that regional premiums, at record highs because of warehouse queues, would not change significantly either.

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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