Hydro Q1: Upstream production rises as North American extrusion demand declines

Roughly 40% of Middle East capacity stayed offline during the quarter. That dynamic was reflected at Qatalum, Hydro’s 50%-owned joint venture in Qatar, where production has been curtailed due to reduced gas supply. Qatalum casthouse sales declined by 15% to 64 kmt year over year, while primary output there fell 7% to 74 kmt.

Analyst estimates cited by the company suggest total production losses across Gulf Cooperation Council countries of roughly 3 million metric tons, or about 2.8 million metric tons excluding Qatalum.

Casthouse and value-add sales

Despite the Middle East disruption, Hydro’s casthouse sales edged higher in the quarter.

Casthouse production increased 2% to 523 kmt, while total Aluminum Metal division sales reached 563 kmt, up from 539 kmt a year prior.

Demand trends, however, varied by region, with slight increases in extrusion and sheet ingot demand in Europe, while North America saw weaker downstream demand alongside higher all-in prices.

North American extrusions

North America presented a split picture between demand and profitability.

Hydro estimated that 525 kmt of extruded aluminum products were consumed in the US and Canada in Q1, down 4% from 547 kmt. That decline aligns with weaker downstream demand conditions.

Extrusion sales mostly mirrored that softness. North America Extrusions division shipped 101 kmt, down 3% year over year, while total extrusion sales, which include Europe, precision tubing, and building systems, declined by a more modest 1.5% to 251 kmt. Excluding North America, extrusion sales decreased 1.3% to 150 kmt.

That said, margins moved in the opposite direction. Higher product premiums relative to scrap and standard ingot prices supported strong profitability in recycled and value-add products. The spread between extrusion ingot prices and scrap input costs in North America widened to roughly $1,300 per metric ton ($/mt) from about $900/mt at the beginning of the fourth quarter in 2025.

In North America, demand remained uneven across end markets. Transportation, including trailer builds, remained weak, while HVAC and broader industrial segments also declined, owing to the impact of higher all-in prices, interest rates, and destocking. By contrast, demand tied to electrical applications, including data centers, was described as strong.

Automotive was the only end market showing year-over-year growth in Q1, based on the company’s extrusion segment data.

That said, management noted that US automotive demand faced headwinds, particularly in regard to electric vehicle demand. In response to a question on the outlook for extrusion volumes into Q2, the company said more broadly that some volume growth is being driven by automotive contracts and new model launches rather than underlying demand, without specifying whether this applies to North America or Europe.

Hydro expects a higher year-over-year Q2 sales in the broader extrusion segment, implying volumes above the roughly 264 kmt reported in Q2 2025.

Metal Markets division

Recycling and trading activity provided the clearest area of volume growth.

Recycling production increased by 2% to 196 kmt, while metal product sales excluding ingot trading rose 4.5% to 640 kmt.

Stronger recycling performance tied directly to pricing dynamics. The spread between billet selling prices and input scrap costs widened during the quarter, which supported higher throughput and improved margins, particularly in North America. The company also noted a limited contribution from inventory gains.

Hydro states that US recycling operations reached an annualized EBITDA run rate of about NOK 2.4 billion (~$247 million using Q1 2026 average USD/NOK of 9.73), up from roughly NOK 1.8 billion (~$162 million using Q1 2025 average USD/NOK of 11.08) the prior year.

Pricing and premiums

Pricing increased across both primary metal and value-add products, with premiums rising more sharply.

The LME three-month aluminum price rose to roughly $3,467/mt, or about ~$1.57 per pound ($/lb), by the end of March from about $2,995/mt at the start of the quarter.

Premiums also increased sharply. US Midwest premiums climbed to about $2,500/mt (~$1.13 per pound) from just over $2,000/mt over the same period, while European duty-paid premiums rose to $587/mt (~27¢ per pound) from $355/mt.

In Europe, billet premium for extrusion ingot were cited at around $1,100/mt (~50¢ per pound), with the company noted that these volumes are typi8cally booked on a quarterly basis, in contrast to other products that are more often sold under annual contracts.

Hydro tied these increases to supply disruption and curtailments in the Middle East, which tightening global availability and pushed the market into deficit conditions.

These pricing moves also lifted value-add product premiums, which outpaced standard ingot premiums and supported recycling and casthouse margins.

Q2 outlook

Hydro’s forward indicators suggest continued pricing strength counterbalanced by some volume pressure.

The company reported that 67% of Q2 primary production is priced at approximately $3,000/mt, while 51% of premiums are booked at $571/mt. Realized premiums are expected to range between $530/mt and $580/mt.

This compares with 65% of primary production and 52% of premiums booked at the same point last year. Aside from a marginal increase, the overall level of booked business remains largely unchanged, leaving a similar share of volumes exposed to spot pricing, particularly on premiums.

At the same time, Hydro expects lower sales volumes in the near term, tied to the Middle East situation, along with higher energy and carbon costs.

Within Metal Markets, the company expects continued strength in recycling margins. Sourcing and trading results are expected to normalize, though currency movements remain a source of volatility.

Financial performance

Revenue and earnings declined year over year, largely due to lower alumina pricing and currency effects, though aluminum pricing provided partial support.

Revenue totaled NOK 50.4 billion, down from NOK 57.1 billion in the previous year period. However, using average exchange rates for each period, revenue increased slightly in US dollar terms to $5.18 billion from $5.15 billion, reflecting a stronger Norwegian krone against the dollar.

Adjusted EBITDA followed a similar pattern, declining by NOK 0.8 billion to NOK 8.7 billion, though the magnitude of the decrease was more limited. Net income, by contrast, declined by NOK 1.52 billion to NOK 4.34 billion, showing a larger drop than EBITDA and, unlike revenue and EBITDA, still down on a comparable basis even after adjusting for currency effects.