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| So obviously, as we continue to work on Jamalco and bringing it back to its full potential, which, as I said before, we're quite confident over time, we will return the asset to producing in the second quartile of the global cost curve |
| Peering to operations, we saw strong and stable performance across our smelters in Q4, while the Jamalco refinery continued to recover from the energy-related disruptions suffered in late September |
| We, of course, have executed similar programs in the past, and we are confident that we will be able to reduce costs and also our cash spending during this period |
| And then as we see the production efficiency improvements take hold, we think that that EBITDA generation will improve in Q2 and beyond |
| We hope to significantly improve on this trend in the coming year |
| The market saw increased demand in Q4, and we now expect an improved and growing Western demand equation in 2024 |
| Together, alumina and other raw material costs resulted in a $14 million improvement in EBITDA |
| The largest demand side story in 2023, however, was the strength of the Chinese market, where we saw Chinese demand growth of 5% in 2023 and expect to see similarly high growth rates this year |
| If successful, the ADE-CBD duties would benefit spot billet premiums in the second half of 2024, and we have accordingly left more of our second half billet volumes open to potentially benefit from the higher pricing environment |
| Our team completed several strategic projects last year, including the acquisition of our 55% share in Jamalco, completing our long-held ambitions to secure a captive supply of high-quality alumina and bauxite for our smelters to create a more balanced, consistent, and robust operational footprint and better position us to deliver strong performance through commodity cycles |
| We expect a favorable impact from lower coke and pitch prices |
| We expect demand growth in these areas to continue to accelerate this year, both in China and the West |
| Despite these near-term headwinds, we continue to anticipate very constructive long-term billet demand trends in both the US and Europe, as automotive light-weighting and renewable energy applications drive increasing aluminum consumption |
| We expect this trend to support significant long-term demand expansion for primary aluminum billet and slab in the EU and US |
| In addition, as you can see on slide 7, we expect that the pending US anti-dumping, countervailing-duty trade case against extrusion imports from 14 countries will have a significantly positive impact on domestic US billet demand beginning in the second half of 2024 |
| And largely, that was based on very strong demand for EVs and renewable energy applications within China |
| First of all, I'd just like to say, we're very thankful for the program and the proposed regulations clearly have a material benefit for Century and also for U.S |
| As Jesse highlighted in his opening comments, we have developed a robust playbook aimed at navigating the current demand landscape by effectively managing costs and preserving cash flow |
| Overall, we expect that Western demand will return to its long-term growth rates as falling interest rates and improved GDP growth returns to the US and EU markets, and the Inflation Reduction Act and similar spending programs in the EU and elsewhere continue to drive increased aluminum demand in automotive and renewable energy applications |
| Turning to slide 9 to explain the $48 million fourth quarter sequential improvement in adjusted EBITDA |
| The European delivery premium is expected at $222 per ton or down about $58 per ton versus the fourth quarter, but we have seen improvement in EDPP in recent weeks with pricing earlier this week at nearly $250 per ton |
| We had strong liquidity of $312 million at the end of the quarter, consisting of $89 million in cash and $223 million available on our credit facilities |
| Looking at Q4 operating results, adjusted EBITDA attributable to century was $57 million, an improvement of $48 million compared with the third quarter |
| While we are not direct participants in the case, we have reviewed the case in detail and believe it is strong on the merits |
| We actively identify areas for efficiency enhancement, exercise prudence and discretionary expenditures and diligently pursue cost reduction initiatives, all in pursuit of establishing a sustainable and financially sound operational framework |
| On a consolidated basis, fourth quarter global shipments were nearly 174,000 tons, up 1% sequentially |
| We estimate that the Chinese market imported about 1.3 million tons of non-Chinese production last year, and we expect that to expand further this year |
| power prices generally, bringing aside the cold snap we had in January, they have been very constructive in both back half of last year and now certainly in the first quarter of this year, putting aside that brief week of very cold weather |
| Chinese demand growth has been driven by the broad macro trends we have long expected, namely in aluminum-intensive electric vehicles and renewable energy applications |
| The ADE-CBD duties would remain in place for at least five years, driving increased US billet demand across the period and beyond |
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| On the demand side, Western world demand appears to have reached a low in Q3, driven by continued destocking across downstream users and challenging EU industrial growth |
| Western supply also remained challenged over the past year by a difficult demand picture that ultimately led to the curtailment of two more Western smelters in Neuss, Germany, and New Madrid, Missouri |
| Unfortunately, demand conditions for billets in both the US and Europe remained weak in Q4 and into Q1 of this year, which created a headwind in our 2024 billet contract negotiations and led to lower pricing that we expect will impact our Q1 results by around $10 million from Q4 levels |
| As we have discussed over the course of the past year, billet demand in the US and Europe has been a relatively weak point in the market, as post-pandemic destocking continued and increased imports of extrusions into both markets decreased domestic billet demand |
| The weak billet demand has driven value-added premiums down |
| Realized prices, however, decreased substantially versus prior quarter, due primarily to significantly lower lagged LME prices and delivery premiums, resulting in net sales of $512 million, a 6% decrease sequentially |
| A nationwide mid-January cold snap did drive about a week of very high US power prices, which we expect to have a negative impact of about $5 million in Q1 |
| Market conditions for centuries' businesses continue to reflect uncertain macroeconomic conditions in much of the world |
| But we did have a few headwinds in Q4 and into Q1 when there were some delays in the restoration of some of the high efficiency boilers |
| We expect volume to be a slight headwind given the power curtailment imposed on Grundartangi facility |
| In China, growth was limited by their 45 million ton capacity cap and continued curtailments in Yunnan and surrounding provinces |
| Midwest premium of $425 per ton was down $68, and European delivery premium of $280 per ton was down $44 |
| Finally, in light of the currently suppressed demand environment, we've implemented a new cost control program designed to lower our spending while aluminum prices remain depressed |
| Volume OPEX and premiums mix were headwinds of $2 million and $3 million, respectively |
| Together, these factors amounted to a $19 million headwind in the quarter |
| Realized coke prices decreased 9%, and realized pitch prices decreased 5% |
| Midwest premium is forecast to be $416 per ton, down $9 |
| And we continue to have a little instability coming out of the energy-related disruptions we had towards the end of Q3 |
| Taken together, the LME and delivery premium changes are expected to decrease Q1 EBITDA by approximately $2 million versus Q4 levels |
| In Iceland, a relatively dry and cold winter has led to water levels in the nation's hydro scheme falling below normal levels, and the energy companies have accordingly issued partial curtailment orders across their industrial customers, including our Grundertangi smelter |
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