Norsk Hydro beats profit view as Iran war pushes up aluminium prices
Quarterly Results and Market Impact
By Jesus Calero and Alexander Gudbrandsen
April 29 (Reuters) - Norsk Hydro reported a bigger-than-expected quarterly core profit on Wednesday, as the war in the Middle East led to tightening aluminium markets, pushing up prices of the metal.
Impact of Iran War on Aluminium Markets
The Iran war is exposing how reliant Western aluminium buyers remain on Gulf supply, as disrupted exports and rising premiums tighten an already strained market with limited replacement metal.
Price and Volume Dynamics
Higher metal prices and volumes offset weaker prices of alumina - a chemical compound that is a key raw material for aluminium production - lower power output and the effects of a stronger Norwegian crown, Hydro said.
Financial Performance Overview
The aluminium producer's adjusted earnings before interest, taxes, depreciation and amortisation fell about 8% to 8.67 billion crowns ($930.1 million) in the first quarter of 2026, while analysts polled by the company had expected a core profit of 7.13 billion crowns on average.
Hydro's shares opened 2.5% higher in Oslo. Analysts from J.P. Morgan noted the earnings beat, but said weaker cash generation, higher debt and a mixed outlook for the second quarter took some shine off the results.
Outlook and Future Expectations
Second-Quarter Projections
The company said stronger aluminium premiums and recycling margins should support second-quarter earnings, while lower alumina prices, reduced energy output, higher input costs and war-related sales disruptions were expected to weigh on them.
Production Challenges
Additionally, production is expected to fall well below historical second-quarter levels due to low water levels in reservoirs and the lowest snow levels seen in many decades in Norway, finance chief Trond Olaf Christophersen said.
Supply Disruptions and Global Effects
SUPPLY DISRUPTIONS DRIVE UP PRICES
Exposure to Middle East Conflict
The Norwegian group is directly exposed to the Middle East conflict through Qatalum, its joint venture in Qatar, where output cuts reduced available metal just as Gulf supply disruptions drove buyers to scramble for replacement units.
Market Buffer and Inventory Levels
With London Metal Exchange inventories already low, the market has little buffer against fresh disruptions, especially as many Western buyers cannot easily replace Gulf metal with Russian supplies.
Aluminium Price Trends
Aluminium prices rose to a four-year high earlier this month, adding to signs that supply worries are pushing up costs across the market.
Executive Commentary and Industry Impact
"Strong operational performance across our upstream and recycling businesses, combined with favorable metal prices, drove a strong first quarter," CEO Eivind Kallevik said in a statement.
Smelter Curtailment and Alumina Oversupply
Smelter curtailment in the Middle East reduced demand for alumina, increasing the oversupply in the world excluding China, Hydro said.
($1 = 9.3219 Norwegian crowns)
(Reporting by Jesus Calero and Alexander Klyve Gudbrandsen, editing by Milla Nissi-Prussak)
