Global aluminum markets face heightened supply pressures after Norwegian producer Norsk Hydro announced that its Alunorte alumina refinery in Brazil has halved production due to natural gas shortages, according to reports from Investing.com and Connaissance des Energies. The partial shutdown at one of the world’s largest alumina producers triggered immediate price spikes across global metal exchanges and lifted equities throughout the sector.
Alunorte Refinery Cuts Capacity to 50% Over Gas Supply Disruptions
According to Norsk Hydro disclosures cited by Connaissance des Energies, the Alunorte refinery located in Barcarena, in the northern Brazilian state of Pará, reduced its output to 50% of its nominal capacity of 6.3 million tonnes per year. The company attributed the slowdown to insufficient natural gas deliveries from its local supplier, CELBA, noting that the supplier faces challenges in securing gas at market conditions compatible with its current financial situation. Alunorte serves as a core upstream asset in the group’s production chain, transforming bauxite into alumina, which is the primary raw material required for smelting primary aluminum. Norsk Hydro owns a 62% controlling stake in the facility, while raw materials trader and producer Glencore holds a 30% interest, with the remaining balance distributed among minority shareholders.
Financial Impact and Production Restart Conditions
Norsk Hydro estimated the potential financial impact of the disruption at between 75 million and 100 million dollars (approximately 65 million to 86.7 million euros) on its third-quarter accounts, as reported by Connaissance des Energies. The company stated that the plant had previously transitioned parts of its refining process from heavy fuel oil to natural gas to improve operational performance. Normal operations will not resume immediately; according to corporate statements, Alunorte will only begin gradually scaling production back to full capacity once natural gas supplies are fully restored.
Global Market Response and Stock Reactions
The reduction in Brazilian output coincided with already tightening global inventories and ongoing logistical disruptions. According to market data cited by Investing.com, aluminum prices climbed 1.7% to 3.373$ la tonne métrique on the London Metal Exchange (LME), where total inventories dropped to approximately 250,000 tonnes—the lowest level recorded since November 1990. Simultaneously, Shanghai alumina futures rose 1% to 2.724 yuans. Regional equities reacted swiftly to the deficit fears. In Hong Kong and mainland markets, China Aluminum Corp. advanced 2,46% and 1,02% respectively, Tianshan Aluminum gained 3,33%, Yunnan Aluminum added 1,06%, Shandong Nanshan climbed 1,64%, and China Hongqiao moved up 1,58%. Japanese aluminum-linked stocks also posted gains, with UACJ surging 3,35% and Daiki Aluminium rising 0,38%.
Broader Middle East Trade Strains
Market tightness has been further exacerbated by geopolitical conflict. According to Investing.com, ongoing hostilities involving Iran have disrupted metal flows from the Middle East, a region that accounts for roughly one-tenth of global aluminum production. Norsk Hydro warned that if trade through the Strait of Hormuz fails to normalize, the worldwide supply deficit could widen to more than 900,000 tonnes.
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