Hydro's primary aluminum stability contrasts with softer extrusion demand

At the same time, weaker demand from the transportation segment contributed to a decline in quarterly extrusion volumes on a year-over-year basis.

The quarterly and annual results did not materially alter Hydro’s production posture, but it reinforced the juxtaposition between firmer primary aluminum fundamentals and downstream demand.

Hydro Aluminum Metal

Primary aluminum production increased 2.5% year over year to 528 thousand metric tons (kmt) in Q4. Full-year primary aluminum production grew to 2,065 kmt in 2025 from 2,038 kmt.

Quarterly primary aluminum sales rose to 547kmt, up modestly from 536 kmt in the year prior period. Annual sales volume dropped by around a half a percent from 2024 to 2,205 kmt.

Fourth-quarter production also exceeded Q3 levels, reflecting steady smelter performance and production above nameplate capacity in certain operations. Management indicated previously curtailed Norwegian capacity is being ramped up, with an additional 50 kmt to 60 kmt expected in 2026 versus 2025, reaching full ramp by midyear.

The share of value-add productions, such as extrusion ingot, foundry alloy, sheet ingot and wire rod, accounted for 63% of total sales volumes in Q4’25. That was broadly in line with 62% in Q4’24 but below 67% in Q3’25. The sequential decline is consistent with historical fourth-quarter patterns.

Looking ahead, Hydro has booked about 70% of Q1’26 primary production at $2,803 per metric ton, including hedging effects, and around 42% of premiums at roughly $478 per metric ton. The company expects realized premiums to fall within a range of $380 to $430 per metric ton in Q1’26.

Hydro Extrusions

Further downstream, Hydro’s extrusion business — which includes Extrusions Europe, Extrusions North America, and the smaller Building Systems and Precision Tubing units — saw quarterly and full-year sales volumes decline 1% year over year to 217 kmt and 9,778 kmt, respectively.

North American extrusion sales volume reached 88 kmt in the fourth quarter, up from 87 kmt the past year, while full-year North American sales volume increased by a smaller increment to 403 kmt from 401 kmt in 2024.

More specifically, management said North American extrusion demand was down “8% compared to the third quarter, which is partly driven by seasonality.” Hydro’s own shipment data show a steeper contraction. Sequential extrusion sales declined from 242 kmt in Q3, translating to a roughly 15% drop in North American volumes quarter to quarter.

According to CRU Group estimates cited by Hydro, North American extrusion demand declined 2% in 2025 and is projected to increase only 1% in 2026. These figures represent regional extrusion consumption, not Hydro’s own output. (CRU Group is the parent company of AMU.)

Transportation segment

Management pointed to weakness in commercial transport, driven by lower trailer builds, and weak US automotive demand for the softening in sequential and annual sales volume.

Transport shipments declined 4% in the fourth quarter. Automotive volumes remained negative, reflecting continued moderate production levels at certain OEMs.

Trailer order and vehicle sales data from the fourth quarter reinforce that slowdown.

According to FTR Intelligence data on US trailer net orders, October and December orders declined roughly 4% and 7% year over year, respectively. November was markedly weaker, with truck trailer orders falling 45% in November 2025 compared with November 2024.

In terms of passenger vehicle proxies, total US vehicle sales are a lagging retail metric, while extrusion demand is tied to production schedules and build mix much earlier in the supply chain. That said, for context, the US Bureau of Economic Analysis’ total vehicle sales readings for the months of October, November, and December all registered year-over-year declines around 4-5% sequentially.

Building and construction segment

Building and construction end markets, along with certain industrial segments, held up better during the quarter.

While industrial and distribution volumes increased in the quarter, growth in heating, ventilation, air conditioning and refrigeration reversed after earlier strength in 2025 as tighter consumer spending and customer inventory reduction weighed on shipments.

More broadly, management said on the earnings call that Hydro expects a slight decline in North American extrusion sales volume in Q1, though it anticipates some margin improvement driven by more favorable scrap pricing in the region.

Hydro Metal Markets

Hydro’s Metal Markets division, which includes the company’s recycling operations and commercial trading activities, proved more stable than the Extrusions segment during the quarter.

Hydro’s recycling production increased to 181 kmt in the fourth quarter from 172 kmt a year earlier. Metal products sales were broadly stable at 623 kmt versus 621kmt over the same period.

Recycling production for 2025 increased by a similar margin to the quarterly rise, a 5% gain to 756 kmt from 2024, while metal markets sales volume declined by around half a percent to 2,539 kmt during the same period.

Management noted on the earnings call that Hydro anticipates stable recycling results and a higher contribution from sourcing and trading activities in the commercial side of the operating division, though Hydro noted that commercial sourcing and trading activities for the quarter will be sensitive to swings in the Midwest premium.

Management said on the earnings call that Hydro expects stable recycling performance, with a higher contribution from sourcing and trading activities with the commercial subdivision of the Metal Markets operating arm. However, the company noted those commercial sourcing and trading results in the quarter will remain sensitive to fluctuations in the US Midwest premium.

Looking ahead

Moving forward, Hydro enters 2026 with a meaningful portion of primary production and premiums already priced, providing visibility in near-term margins.

Previously curtailed Norwegian capacity is being ramped up, with incremental tonnage expected by midyear.

Both factors suggest primary output will remain steady barring material shifts in pricing or costs.

North American extrusion demand expectations remain restrained. As a result, quarter-to-quarter volatility tied to transportation end markets may continue, even as scrap pricing provides some margin support.

Primary aluminum market conditions remain supportive for Hydro’s positioning. Pricing levels and regional premium continue to provide margin flexibility, even as broader metal markets experience periods of volatility.

With a meaningful share of production priced and incremental smelter capacity returning, the divergence of Hydro’s upstream stability and downstream caution is likely to remain a feature of its operations in the near term.