CENX - Earnings call transcript Q2 2022 | Century Aluminum Company

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Operator

Good afternoon. My name is Samantha, and I will be your conference operator today. At this time, I would like to welcome everyone to the Century Aluminum Company Second Quarter 2022 Earnings Conference Call. Today's conference is being recorded. [Operator Instructions]. you. Thank like call now host, to turn Trpkovski. Peter to would over the your I begin your may you Sir, conference.

Peter Trpkovski

by President Samantha. questions. take welcome Shelly Treasurer. call. today After to you, Harrison, the Gary, Thank Good of comments, conference I'm afternoon, Senior Vice our joined Finance Officer; prepared Chief your Executive and everyone, President and Jesse and Century's and here gladly we'll

disclosing website as Regulation reminder, a today's of information As a www.centuryaluminum.com. website use our FD. available company our presentation the We at on with means and material about complying is for

presentation. Turning now take to to Slide turn to Jesse. the contained in X of statement measures with financial moment today's cautionary review call respect over shown today's non-GAAP here Please the discussion. will to I and statements forward-looking a And

Jesse Gary

QX and Financial Jerry Thank announcement on up everyone Bialek to our to by Tire, Cooper I'd Century and Jerry for recently our today start like welcoming Officer. thanks as you, was Chief Pete, most to CFO following at be from that, us Monday last joining. to new and join and call. team. Jerry him Ford Amcor. excellent hear can on with will addition expect career officially from directly our an and He to this will all a month, later great had you earnings the before

Okay.

I then before Turning and outlook take will Shelly QX start environment talking by and X. through QX and to you I'll Page our up. about the operations, results macro our wrap current

course The the with conditions quarter. quarter market changing significantly second to of over the be proved dynamic quite

around We balance increase to the averaged of capacity spot and actions of million up $X,XXX took X%, business pricing our needs total and the a with and LME sheet, quarter good Second net $X,XXX. with We credit quarter number facility. of extension the through sales XX% $XX now flexibility arise. the versus to level our is adjusted in prices think allows our QX solidify our this including a of shipments of borrowing EBITDA respectively. a was in The the liquidity term million. is as capacity to for fully borrowing utilize finance they XXXX facility extended revolving us $XXX base and

We also to total operations the Mt. liquidity million million. portion end sell us Earlier of remaining under consideration strong facility, as giving Commerce outstanding real $XX cash in in borrowings from of of the the total binding repay entered a we located property Park this to agreement sales quarter million. used for of the $XXX into Holly $XX month,

formed the in we excess in bring order site community to land mid-'XXs business to assist and the develop the Park As Commerce the local a additional area. to at reminder, Mt. the Holly to

the the Over sales of Mt. conditions we at excellent to remains course which lots of effect the sole subject the have Holly Holly quarter. the development. for price and to smelter. is does the ordinary for Mt. sold remaining lots site off all on expected an we in us dispose enabled main transaction years, acre land. achieving while site, the close owner This individual transaction and have any The fourth of the X,XXX not remain sale operates to The

the to market. aluminum Turning

aluminum on from remain X, balances You fundamentals can the see strong. Slide

lower deficit drive already that will to over and inventories premiums. support expect in the continue short will demand remain and year We supply slight aluminum balance global which regional the of of

growth. strong remain macro LME short electrification, will the pricing continue to term, renewable trends likely drive packaging in demand and in volatile energy will towards demand sustainable While longer-term

Europe remain expect in trends in in the We where both pellet favorable spot markets these especially prices value-added and strong to remained U.S. QX.

aluminum from and once Grundartangi casthouses, extrusions increased new complete, to placed our X well demand are the value-added meet for U.S. casthouse. sheet and We

complete. casthouse Grundartangi the projects and casthouse In once fact, U.S. are debottlenecking

production our at PXXXX of XX% a XXXX premium beyond. over will that in expect to be and sold We

Okay.

Turning X. to Page

energy megawatt about France Nord lower up to EUR war about continue turn, historical XXX hour You of to Pool Russian that with in on European EUR XXX at per EUR significantly per markets, Western only Russian Nord European megawatt European flows of and gas over upward now in in natural see prices curtailments have, This price Russian High Flows approximately In other XX% regions. QX, the prices energy in Europe to paired Europe, to the are average. energy has cause pressure put albeit over their in prices gas Germany, spiking markets. Pool Mainland resulted Ukraine, of power averaged can turmoil hour, XX in QX. mainland energy levels. pricing

at to more Fortunately, the Pool around system. Pool moderate energy should volatility QX Nord EUR rest to normal Nord levels in XX that of Norwegian maintain prices keep Pool with This exports levels. in Europe and reduced they to with when reservoir limit averaging far officials hour the megawatt in yesterday Nord in prices will per Nord Pool necessary announced the July. help so reduce

We are also Nord reduce disclosure. own our Pool in remaining to steps exploring volatility

only Icelandic reminder, remaining the Pool energy are As contracts. contracts about with paid of X/X under provided our price, a Nord long-term LME-linked X/X to the power

an We hedged XX. little XX% remaining XXXX average of Nord price over of have Pool our at a exposure EUR

Nord onwards, our average From have XXXX XX% Pool price we we not exposure exposure. of Nord an have of XXXX, EUR For Pool any do XX. at hedged

the system. with levels much energy Fortunately, above markets better fill or the physical average in reservoirs Icelandic rest Europe the at supplied are across of than Iceland

In the Europe. system addition, Iceland's systems avoids fuel cost significant seen and of in coal renewable pressures in the gas-based XXX% rest natural

energy cost Turning QX energy Holly by production. and has have and natural volatility The also to nearly to coal led tight impacted to significant have Hub to coal exports power Indiana $XX purchases. energy from averaged Holly has prices, domestic quarter-to-date. increased event Mt. gas Holly to low to shortages our to portion majeure markets generation our coal contract, Energy by force Mt. a approximately combination pass energy will generation power their of per growth us, megawatt largest around in for increased energy and market utility the U.S. our markets factors these our These which higher the which costs been increase QX affected $XX Domestic QX. left Mt. where the provider hour over they allowed of in with facility $XX Under supplier their these cover

this will resulted Hawesville curtail expect in We of to million impact QX also operations. energy decision prices $XX negative million. an our have a Elevated unfortunate EBITDA to in $X

decision lack market working jobs the these smelter find made if for energy saying financial that It return going locations prices. state this allow normal will at local was energy new to the consumption that conditions and through given are relatively goes accommodating our smelting U.S. Hawesville to other and Shelly our necessary of a walk levels. continuing smelter, we employment, to you forward. curtailment value-added will untenable The the conducted run impact at affected without when in with difficult, restart casthouses, more of results was the and of of including which QX offering resources on where and federal, employees While our high help technology was it the the manner economics possible.

Okay.

through commendably Turning has our operated weather. to facilities. hot the Sebree other summer

their Our operations executing North well initiatives. debottlenecking on been casthouse American have

by increase casthouse production. operating new Progress to schedule with the tons. initiatives at new smelter billet these remains metric XX,XXX full production Grundartangi and excellent, XXXX billet on Operations expect on now We on approximately were at budget.

construction the will Grundartangi billet carbon completed be filled in will in allow QX expect marketed which be We low 'XX, and to XXXX.

These QX tonne to API Europe of prices and elsewhere. producers in other and have leave per prices portion averaged $XXX underwater, alumina cost tonne curtailments significant and recently Finally, a seen supply today. spot of we price per have a inputs. our small fallen to moving alumina in $XXX

remaining curtailment, purchases the have of second percentage to transitioning seen risk alumina price the combined the where to in the price, of we decision we half further 'XX aluminum majority possible. LME derisk made with by contracts Given aluminum the volatility our

of during the and achieve will below Given risk that year our alumina were alumina dislocation were levels. a our price period. prices this the and high percentages back half the we API historical the aluminum low well to to to volatility lower able exposure between aluminum This in reduce relative of price,

materials. other to Turning raw our

head Shelly coke further we declines for and see prices year. We with peak into now of first pitch have the end have the expect finally seen walk coke we after started X the We the to that, the of as to decline year. months increasing month And the through this over pricing financials. to both should and for see turn it you I'll

Michelle Harrison

Thanks, Jesse.

prices primarily Let's and turn X% quarter. On the rates quarter through at were as XX% you sequential up Mt. prices of consolidated about combination increase Realized to realized and result regional shipments higher The a take Holly. I'll higher the LME XX% shipments of driven to QX results X, selling by additional volume dropped sales. net a for quarter-over-quarter basis, and Slide a premiums. prior drove in lagged compared

Looking net a or compensations. charges million this was share-based results. realizable million removal value in $XX lower cost QX include and $X for Adjusted items at quarter adjusting $XX add-back operating million EBITDA for and of a credit

impairment included During Hawesville $XXX asset warn charges costs for with estimated curtailments charge million one-off and the $X QX, notice. we the which an labor also adjusted accrual a associated million related X to for

Okay.

evaluate a curtailment So charge. more the on the GAAP, color let facility here us Hawesville to for provide triggering impairment that asset that recoverability. group was little required a event U.S. me Under the of

historically its As the down of that was record carrying fair group power to it value to and estimated this the not value. forward we of charge Hawesville result asset asset group write a high the recoverable, costs, determined was

Okay.

Moving on to liquidity.

during had of As we This cash QX driven generated $XXX of from under a our credit revolving EBITDA credit million represents by prior part, that reduce available facility. borrowings our in X/XX, quarter, allowed $XX increase million. facilities liquidity to and us from

quarter volumes We also aluminum hedging lower based off roll collateral continue on our had under those prices at to as lower end. agreement and requirements

QX, mentioned, Jesse provided which U.S. our in additional we facility revolving availability. for borrowing as upsized Lastly, credit

Okay.

Slide to X. Turning

EBITDA. Taking prior up increasing pitch quarter. of power for X% realized European $X,XXX prior megawatt delivery is hour lagged on the realized hour, about relatively sequential was percent, alumina Coke a higher and Here, a normal QX decrease that's while alumina prices and we'll in Hub almost lag the $XXX Indiana price The averaged look LME XX% a over tonne. $XXX alumina. upward quarter, was quarter, little in realized basis. prices prices index versus while another prior versus while continued XX%, with flat $XX per up at versus up each. which go were per tonne through a Midwest averaged prices or megawatt LME-linked The QX versus was up a trend X-X in QX, $XX both premiums adjusted million QX $XXX

in QX million on activities mentioned we operating we we drove which lining caught QX, deferred had expense a that up swing maintenance quarter-to-quarter. $XX As last quarter, in pot and in from

Okay.

flow. Let's and at Slide turn we'll X, a take look to cash quick

spending the on Mt. Grundartangi payments. final was the going made million QX, $XX with $X Our paid casthouse. Cash $XX said Holly down was $XX related cash We've X/XX to from at at in restart bond the of as related $XX we the X/XX $XX semiannual the in position CapEx pay at we QX cash quarter. million to facility. settlements relatively million million to million $XX and used flat, interest as million hedge credit about that excess for to spending revolving about million our remained for

prices based capital a on related which inventory additional higher had days and build, we on modest material Lastly, was working increasing hand. raw primarily to

working curtailment in back which of we the year, half cash. turn the reduction of into to capital expect With see a of the Hawesville, should

Okay.

give our insight Slide Let's some on turn you quarter. expectations for to third I'll the X,

a price premium to premium forecast tonne, down basis. is realized per the European be be income the we cash Realized LME lagged delivery expected the to is we to forecast as be tonne basis, see of benefit benefit prices prices. a And past, alumina discussed and we're lower QX $XXX lag P&L. in alumina QX be expect the $XXX. QX, already so on Midwest the expected For to in in lower realizing of to prices, our reflects is a X-month a our statement tonne. lagged $X,XXX On $XXX The alumina to alumina X- to a is

Hub QX LME, million about and assuming together, rise premium base and a decrease moves pitch $XX increases throughout impact Taken power QX Indiana about by QX. expected per versus a price versus with pitch for results we're for in is are and a line of net alumina These quarter. continue hour XX% for prices of From EBITDA coke decrease EBITDA megawatt EBITDA what energy which to pricing delivery in July $XX the saw we for quarter. million Pool, and $XX impact perspective, costs would prior those actuals. a QX, versus QX to The levels. versus we expected Nord the price million drive to equate to Coke decrease X% $X second by to and are both expect

softening in However, the we the QX. of expect market that in to are QX seeing in now signs see from P&L benefit and coke

approximately Lastly, $XX million levels. together standpoint, net maintenance benefit positive savings EBITDA loss levels From as in to of from to around third a top not a to as our as from realized equate Hawesville tax plant we we a million we quarter, expect now results should $X taken $X mentioned to I total, and items expected our catch-up be expect $XX to back about our to expect that the in will million. and our $X negative of curtailment million a In million. the expense we QX from of QX these all QX at lining to see initiatives $X hedge anticipated related range we for in $XX occur the million and global is million an to to $XX be decrease normalized million cost EBITDA reduction expect to of $XX from well QX savings

net a As below or impacts sorry, impact result, these these a both income. of impacts geographically be -- of and will both as adjusted EBITDA will reminder,

at than over markets Hawesville allow Going will with I will when a for ongoing costs expect it quarter $X per that less restart to spend we back And plant to to and necessary for million that maintain Jesse. state forward, ready hand that, it permit.

Jesse Gary

our focused remain Across on cost assets, Shelly. Thanks, disciplined consistent and we operations.

half energy of macro begun Century benefit have should environment. more in of actions a that a that a term, to make While in from the trends implementing well sustainable positioned high-priced second Century convinced has we position long-term cost vital of weather challenging to component environment the market long-term future. remain to To our ensure balance to short $XX number to this turned aluminum end, measures is projects over we is that execute cut good in us the strong spending have a this reduce savings liquidity well These Combined market or compare. the approximately to capital conditions be we in to If further position, future the million these actions that to include actions identified year. taken defer may placed we can continue with our strategies. leave on necessary, the

and Finally, I'd take the moment safety work excellent improve over for performance commend to a Century, and Safety our core a our each is to day. operations across every an like quarter. we hard value for to assets

that, of over All of their with we'll to our proud efforts. turn questions. feel And employees it

Operator

Instructions]. [Operator

line Your first question Capital Markets. the comes Gagliano from BMO of with David

David Gagliano

comes there current to if the about the stays are Can ask to, it the question et you taken? Obviously, roughly first other to speak bit considering of type And to environment was action be actions? way wanted the before And just question. aggressive environment. landscape. Sebree, additional an we little actions would other cetera. the a Hawesville the see what I Hawesville, idling similar see we That's to environment of alternatively, my need assets, is,

Jesse Gary

operating record and to we've got and macro think course. look excellent long-term building near And value-added got technology. individual remaining to operate They've guidance the remarks, company, in to to at aluminum. for we've think got -- when I footprint believe a or Yes, at Thanks. as long-term backdrop We more We've macro David. firmly performance workforce, this got I efficient at casthouse consistent to to we liquidity, XXX% continue assets, the taken production. They've casthouses. our continue of continue strategies. of value-added track on -- continue provide we my assets, But end or they us permit to operate then strong profitability. necessary the actions you of for as said don't on the execute Sure, the in

some recognize So a that mentioned dynamic capital today. started good we is some quite to measures of But implement these position. the I environment. we a very think said, cost-saving this we're actually in we We deferral But now, or if at. we're to take pull can we additional necessary. items good additional decreases. as And where levers then necessary, feel we've that with got some right pretty

David Gagliano

more it Okay. X here LME and That's half to year. of helpful. is, in the And alumina in just then know mentioned clarification. see I XX, API you shift it think the for I slides I Slide versus on percentage the the second

is pricing tightened for our so up, Or it there alumina is left any LME? models all have Just XXXX? we percentage API-based

Jesse Gary

about It's a in -- time. fixed just XX% the back the with back is. at there looking that said, XX% I relationship decision as we at No, the And and good API-linked for relatively yes. LME-linked, made XX% half half,

So given potential good the impacts, production levels and in sense made to a side, lock the of sides, both risk derisk a when a the off to it's it relationship a the table, it relatively compared bit But little just especially good relationship. take sort for little alumina historical when on alumina volatility ourselves. on chain supply historically was

David Gagliano

a cetera? for that similar is dynamic, we XXXX? XX et of And Okay. Should assume similar plan XX, type a

Jesse Gary

Yes.

to contracts those you're long-term going always contracts into API of that built have are there. Some some

also are Some of out fixed contracts price. as there the the well will long-term LME contracts go as

on can price the down. the as there's a lock that we move bit QX, of that of So into beginning sort that get enter way into either just margin little we'll to start

next guidance on you the for better have we'll So call.

Operator

of question Riley B. next Pipes comes the from Securities. Lucas with Your line

Lucas Pipes

Midwest has Hawesville it Sebree Power. I want about like also to ask because also,

maybe asset on wondered different? makes if I this So in hone what you could

Jesse Gary

produced. But what with got we technology income little premiums one repeat amount the that of source aspects big a there record bit of of especially, specifically, today. of just is a got the find that from in mentioned for consume Yes, Sebree you've additional Lucas. per the Sure, have I aluminum period they on have today. energy margin billet When the from be where you a to will value-added casthouse, of like the value-added another the smelter of piece bit you've other a when energy provides produce difference necessary stream, very And the just Hawesville, side, combine amount a the in a big run of smelter, that environment hand, run we is unfortunately, highest don't was Sebree, you at better, is then a very conditions. price I on quite on energy which assets high it's look aluminum. to profitable asset. very consistently third been history, at lot And a well over touch Hawesville-type the different think and of Sebree's a especially you a

so make will that return as be we continue can and confident to forward, look we on there. profitability, returns And get quite it investments we'll that the to we

So the high level, that's difference.

Lucas Pipes

Very helpful.

of quantify In the at terms vis-a-vis power Hawesville? to a there Sebree, way is that intensity

Jesse Gary

individual level our can fairly based No, detail. terms breakdowns material. of we in on don't really you is disclose just that But that of asset in -- actions judge

Lucas Pipes

X today? you power with at us could highlighted. higher-priced to environment? Holly No, Mt. where with helpful. I points what might move side, Very a And appreciate there the the remind you staying stand Holly, And prices power Mt. power extent power then on prices

Jesse Gary

sure. sure, Lucas. Thanks, Yes. Sure,

that a the service-based Holly Kentucky energy cost Power different contract. just in contract as the is contract of it's So than reminder, power a Mt.

So through XXXX. it's a X-year contract

still had portion majeure and and our is fixed energy So to cost market the lost make Overall, rate really their prices force and is supplier. the Kentucky higher, lower the of been to up has today. energy we're majeure energy the in of their a blended experienced, seeing fill they've Due for than to source subject to fuel portion elsewhere the costs. they to coal in is providers' mark force a the

confidentiality price just megawatt you over We $X then to to QX. impact a the a million give some QX. due and Lucas, million -- little more, but actual about EBITDA sense provisions, from about $XX look can to in to QX a $XX don't you So power disclose it's increase

Lucas Pipes

Reduction try measures support including I'll then And to last Act, detail. to the aluminum. the appreciate in some I one. Really includes The squeeze believe, manufacturing, domestic Inflation Super.

you So benefits that? at look chance to have had what a to Century? be And the might

Jesse Gary

question. Great Sure, Lucas.

think haven't as still a every I'm I bill, course, been so of -- I not the aware. detail, As is far and passed, XXX-page bill as through

our have So positive will both still indirectly. think directly changes. subject impact, off understanding, early we the bill do to But a and based

as today's well as we as the as generation renewable as drive are continue bill cost drive understand, energy down solar generation in source aluminum-intensive, lines a also them of that So to prices tends be renewable subsidies tend which energy should wind the energy lowest the demand will transmission and as aluminum connect primary to They whole. assets market.

another So that's positive.

we internal electric pounds discussed, the further bill which, vehicle. and XXX these products aluminum Second, provides for subsidies, vehicle more combustion value-added as primary

provides So to real finally, demand, and already on minerals, is aluminum the supply bill which And measure that is resilience should primary that that's -- has strong one. dollars to be then we as positive see further to growth. of continues critical been as help this continue another the which chain and defined for but potential, a growth drive

that and So at be opportunities discuss further look to goes there we'll past. it may once continue there

Operator

John Research. from of Independent Your comes with Very next question the Tumazos line

John Tumazos

and more XX minutes, the think be And was for for a than more but we for accounting might you very you very thank XX-Q full much clear. of it's explanation filing for which disclosure. the That detailed read the I Shelly in better. Thank can Hawesville,

and headache, big X them. of have time don't it's to many the rid has that cost has fallen committed out ago, you've reversal price good hedges income, to felt collateral big Midwest aluminum so a hedge the is and the this to get like you hedges to good that had and maybe close a premium fallen as assets credit this maybe time a Now or months

Jesse Gary

great question, John. Yes, it's a

off hedges hedges XX, majority at if are you of any look year-end at roll the on books, it's majority the to the just Page So -- hedge the see can event. of in the going you vast that

year. Midwest LME you'll entirety will you'll levels gone of hedging. at in And low sort to see of its the be end of down the the very be So position

we'll is the think I So side that energy really size be naturally, where of sort hedging especially to side. position on and and that a back finished is almost the on now, only Nord hedge Pool position material

So at... if you look

John Tumazos

profitable. Be [indiscernible]

Jesse Gary

sir. Yes, Yes.

John Tumazos

probably when energy up in expect clients restart $XX go or higher given Back X investor Hub out or My supplies electricity output some they to December, any Spain, natural Indiana think that know idled very renewable in thinks gas as to view going clearly, with locked XX% gas volatile Alcoa historical now. higher XX%, in Henry their we're spot the share of exporting years I price for to who gas And Hub we're energy don't electricity back is much gas. electricity, is I that XXXX. prices. to prices me would

that shale decline, the promised because and their fields of Some bind. gas so are people gas Europe to believe could maturing and President much our

of but power renewable contract smelters, one or lock can't don't want power. say for bad imagine price, a price Kentucky both renewable regardless I not in I for to why So a

Jesse Gary

us stable volatile to Yes. could very very looking look see gas of long well of future. very that think at some pricing something to the I about would We be I at considering is energy past coming period agree very prices and in commentary, the very say to term long going over out we've just the think of the here. and and consider over past, do And attractive the talked both a the Indiana and we're mean I obviously is continue in year other prices. seen with do Hub natural and I we've renewable you.

some do relief. we think see of I signs

U.S. weeks, the sort gas should whether wind And production fans additional pretty continue I of I they've as in -- renewable see. which take to foster Inflation to over look solar. to help to If resources the U.S. forward great and back provide which of significantly core South Lucas into record the at to the to us agree, Carolina, big good that future, the But XXXX. hitting think levels, [indiscernible]. Reduction is in advantage very will your continue we point, past you mentioned, or of we're think And in been several generation Kentucky, backwardate opportunities prices

Operator

question line Tanners next Your with Timna Research. of Wolfe from comes the

Timna Tanners

more less when that wanted little if on the curve time. scary prices, to I missed maybe February get above actually, had first has into you I been the the a joined bit at Hawesville, XXX. of from we lot MISO than late, price, if announced Nord anything, I actually seen ask the a it, in forward And power forward but quarters, had but closure through is we Pool December

how it? the these So I guess extended you're you I shut how if managing decisions just time? curves make much enough have it Is And about in through how wondered do Pool and thinking given just we've forward Or looking about confidence talked volatility? about to you Nord that? at an period of

Jesse Gary

and to with Actually, think I and look Yes. interesting you indiHub other significantly in Nord both you curve. our levels occurred, prices Pool, When seen words, below and actually Hub the It's actually on look because right. look then really at the on again, have both pool. prices, energy forwards you're Indi North realized forward if you've at the that spot that you

priced sort wind occur. And me tells have pricing high that course lot you you Pool wind that we'll Nord less QX outcomes and some market. and is With $XX where very high risk significantly what sort on of So that you're QX, our certainly there have into is we've not have bid some on prices. the specifically, per a you of Nord there's Nord where see days megawatt generation to Nord contagion and hour. are And mainland the Pool situation of realized into provide strange from the generation think what pretty that's the a that Pool seen which into lowered a continue premium creating some forwards, is of Pool, going days over entering the huge being hope in days, we seeing is that's than

and focusing of decisions on exposed Nord the Just XX% that's X/X we're hedged a year, just so of that's balance XX% going reminder, energy forward for as and and speaking about Pool. the on Nord only to our hedged Pool,

really you our high which XX% mix hit small actually hedge of overall for exposed the a once to very the goes to is up energy it's those And start Nord Pool forward exposure. see portion prices, really So Nord you Grundartangi when Pool. of that's to XXXX,

So megawatts that going down to few Pool actually very now you're Nord exposed are forward. to

that smelter. imagine difficult a to yes, So where situation type putting for exposure the be Grundartangi it's of would

Timna Tanners

Okay.

I'm period manage the saying? reading it trying be -- if does in if price want Is today. to we until lines, but mouth, more recent between prevails you're really sorry, this to point I if hedged that double have levels, comfortable you more the of situation do just then kicks that at So don't know I'm the and which you feel words than your where fair through you put given time were could -- summary XXXX what would of off, the you that what from

Jesse Gary

we're our for X/X of balance the contract. 'XX, XX% exposure energy again, the which hedged total the of for even only, Yes, is for

the to sort then are But finish exposure. balance we looking if just So of that. a XXXX, we chance of of if decrease say at and I'll a to XXXX, for of with, that and the huge do that's get ways volatility can even the we balance for not year the balance

Shelly Lair

and XXXX then And beyond.

Jesse Gary

next of us energy after to That beginning energy through exposure. goes energy fixed-price a that contract. XXXX, XXXX for the no portion Shelly's -- Nord contract we then Pool Yes. remind X goes to And a in years. just fixed-price have the going That

that X/X price. have been your percentage, be is you'll will long-term the have 'XX, in always of Grundartangi, contract remainder starting a for energy LME and which at So fixed

Timna Tanners

for into into Europe Okay. speaking. of customers heading and insights be going the back seems have a you any your or rationing is thoughts from like prices, impact I the Excellent. It power broadly that? impact of year to or half on challenging period from mean, electricity there any

Jesse Gary

It's a great question.

attention, we deteriorate yet. paying I think haven't everyone obviously the our demand is orders in but actual seen

leave just that. maybe yes, at So it

actually X-year rationing when interesting what to at of risk. Europe look you think there's are in I people storage gas It's look may recognize levels natural a from LNG that uncertain today, quite that, People above like. coming as it. that shut in gas not obviously, and off to is enough concern But replace is are averages. that remaining actually is flow Russia they're the imports

the we is you and else say further nothing in decent storage you'd look going if a now, spot. But there's at the on, future. in right they're levels investment recognize So all

Timna Tanners

for appreciate the it. to comments. not on navigate, you and candor Definitely things take to all challenging it Got I your lightly, trying

luck. So best of

Jesse Gary

Timna. Thanks,

Operator

a have from question with Markets. BMO Gagliano You Capital follow-up David

David Gagliano

bit a with I'm going nitpicky Great. of question. right. this is preface All that a to it admitting

So worth. it am what the take it's I about curious But for answer.

than that any look you I volumes there's things that assuming the wanted in from landscape, that XXX,XXX, the of at of is XX, is tonnes. down tonnes it kind volumes. is Or for percentage hedged, I my when Slide decline? reason entire by hedge, of to Hawesville question. implies like So That's going other 'XX, That's volumes for and Is the on XXX,XXX a implied take percentage first the couple to the I there the quarter, prior that about. period? hedge quarter out and one and XXX,XXX financial 'XX compare Number a ask it prior

Jesse Gary

David. That's reason, Yes. the

David Gagliano

go second commentary to I a just volumes And your from tonnes. question, in a the then about the heard And did LME, for Okay. lot, the XX,XXX hedging. up XX,XXX hedge but 'XX little not obviously, went bit not

change for small is on to should a So I'm what the just into reason curious, go-forward that And for we XXXX? volumes increase the hedges? in basis hedged how admittedly that LME expect

Jesse Gary

Great that Yes. Great question, is all that small. Yes, is, catch. David.

it's is the hedge that's contract. that against Nord replacing power the the power mentioning fixed-price just we LME tons that That's you're Pool some metric contract difference. think X,XXX I

we LME and some a remaining price when against of So that high those and a power of portion which creates that small opportunity from metal fixed the 'XX, power 'XX, really the sell levels LME saw we contract the contracts. saw just synthetic like percentage looks 'XX, to

it for as closer guidance there, about even you nice the creating low derisked Grundartangi other more So similar fixed price to we we'll but further a and the LME as some contracts that is period. think to can get give as linkage being start exposure

David Gagliano

Okay.

see hedge in will So XXXX? more into of go-forward the we of falling a then a... book that on that is kind Or basis,

Jesse Gary

you that small because pretty to not power. amount I mean need it's it's hedge much that

what if would fixed here done going offset or we've there, remaining tonnes it's just say, majority few the be So of to the anything, we've to thousand done, a I exposure. there price

Operator

[Operator Instructions].

We have Independent the follow-up question from a Research. line Tumazos of John Very with

John Tumazos

there someone spot really for that gas at if $XX $X worried high I to at down regarding much any business is or power bounces about it us to could But is is you price $XX talk that your high or Jesse, don't by gas a spot that you Sebree, so give too know want slow how or comfort if price swallow? you asset. guidance could Sebree

Jesse Gary

some to going Yes, track is asset taken production take also John. not keep think we've over say can And to when through action, running tell it's the approach cost But record environments. I action. also price will been time, go disciplined. that managed of to what been date we've you very and difficult we've our our individual guidance, to very to sort our necessary by I'm commodity I And

where so we Hawesville, late, curtail have a think when we've But our what weren't put that, rather cost necessary. than then able position that early production. in don't been act do done to at we've record we in we've And disciplined to I is track action where recent that. look do to Obviously, ourselves you at to over time, unfortunately, and tried this so

given what setup at future continue business to to hopefully, we it that, intend how leave to that the ensure to we that just believe get the I'll but operate gives to sense macro is aluminum. we for maybe very you So a positive continue of

John Tumazos

scrap customers clearly, go you've marketing, need not with Because plus given anywhere to certain Carolina? be to that Jesse, doesn't sure heavy. important cans. go got to don't else awful power have aluminum domestically. Why to flats. different switch those in their terms the the X that's of like can increases, cars to recovery and steel in are have utility back so customers but Bush hope like -- with their building I are billion slow. customers customers I'm like Tesla there are want long-term batteries cost can South And Ball And plus you've because contracts, aluminum

Jesse Gary

Yes.

whether right? long-term focuses itself that see these years. are years, I packaging, think to sustainable these EVs, are industries X for are penetration the the We year, know that going you're years, trends the right out U.S. some and We trends, lightweighting, aluminum about things. key both XX renewable all over government X next it's there, increase industry the energy,

think the the continues balances we when for the remains look see you on at are So industry that deck you need And the market in to in here. that the earlier for aluminum slides our world. just U.S. the it domestic support can shortest that

And some one think see that commercial Reduction the minerals rebuilding as raises build Act start the so as a recognize sort these domestic to clear of out, opportunities it's and that of in chains, that I you this. like supply be talked we to of will aluminum see Inflation things critical we like speak we And about. the part that

our in talking certainly, our be well casthouse for we committed on commenting we're to way very produce creative applications that are alumina. the of to too, are I industry negotiations, have and think any necessary specific the about. extrusion we always to And sell servicing sort that with the value-added you're domestic without the we're So that situated, trying sheet

should So proposition to and pursue very a intend we be think valuable commercially it. that

John Tumazos

print try so could you print optimism? fine lot the ask in to don't is it's the know one goofy anything about read your me. I of thank I from patience this Jesse, good Inflation and a give to crap with got name. Washington. I Reduction Act, a for not more, if except What's or any

Jesse Gary

you for just the full the focus, bill think some looking energy the -- things positive developments haven't like subsidies, strokes again the produce mineral think can which and produce at as critical are still talked for mineral law, it. provide finally, a than hasn't we're of full broad subsidies, aluminum we should earlier, I the are which combustion intensive demand slab more engine It defined which industries including contracts specifically our renewable passed billet in and been thing. But for for EV, signed I critical and sheet Well, if as casthouses. vehicles, about and produce Congress aluminum increases demand been Act. the still hasn't and as aluminum, and demand you through including much I internal specifically, past, and value-added at said if still I again, look extrusions, there renewable U.S. the into the And the we some of aluminum, all help energy support look in EV very additional that direct in which may some the and is

positive us. we So focusing we'll the it, think, a be of have but to and whole, obviously, the a on as bill see, for should aluminum aspects

everybody, for talking look forward call, to the you QX. joining Okay. after that, to we and With thanks,

Operator

this today's and gentlemen, call. conference Ladies concludes

may now disconnect. You

Century Aluminum (CENX) 10 Aug 222022 Q2 Earnings call transcript