Century “will begin the idling process” for its smelter in Hawesville, Kentucky, on Monday June 27.
That move could partly reverse the steep slide in US aluminium premiums, Fastmarkets sources said.
“It could raise the premium but not in the short-term,” one US aluminium trader told Fastmarkets of the smelter closure.
“Hawesville’s closure definitely could raise the Midwest premium and make the US premium even higher relative to other regions. It all depends how much they have in stock,” a second US trader source said.
Aluminium is one of the most energy-intensive metals to produce.
“This unprecedented rise in global energy prices arising from the Russian war in Ukraine has dramatically increased the price of energy in the US and around the globe. The power cost required to run our Hawesville, Kentucky, facility has more than tripled the historical average in a very short period,” Jesse Gary, Century’s president and chief executive officer, said in a statement.
“The company… expects to idle operations for a period of approximately nine to twelve months until energy prices return to more normalized levels,” Century noted in its announcement.
A spokesperson for Century producer did not immediately respond to Fastmarkets’ query on whether falling prices for aluminium also factored in to the shutdown decision.
Prices for aluminium on the London Metal Exchange have fallen to below $2,500 per tonne, compared with $4,000 per tonne in early March, while the benchmark US Midwest P1020 aluminium premium has declined to an average 33 cents per lb from 40 cents per lb in early May.
In a broad-based sell-off of futures on the London Metal Exchange, the three-month aluminium price fell to $2,479.50 per tonne at the 5pm close on Wednesday, down by 2% from $2,533.50 per tonne at the previous 5pm close and its lowest since July 27, 2021.
Fastmarkets’ assessed the aluminium P1020A premium, ddp Midwest US at 32.5-33.5 cents per lb on Tuesday June 12, down from 34-35 cents per lb on June 14.
The smelter closure will also result in 628 employees being laid off, some 500 of which are represented by the United Steel Workers union.
Representatives from the USW could immediately be reached for comment.
The Hawesville facility is Century’s largest US smelter and the largest producer of high-purity primary aluminium in North America, according to Century’s website. The Chicago-based producer maintains operations in Iceland and the United States.
