Cyber-attack on Hydro impacting downstream operations only, primary aluminum production not impacted

If anything, at face value, impact would be bearish on LME prices, as primary aluminum and alumina/bauxite production "running as normal" but downstream production facing "challenges and temporary stoppage at several plants."

Norsk Hydro, the world's largest integrated aluminum producer, was subject to a cyber-attack in the last few hours. In an update filed Tuesday afternoon to the Oslo Stock Exchange, the company communicated that it "is working to contain and neutralize the attack but does not yet know the full extent of the situation. It is too early to indicate the operational and financial impact, as well as timing to resolve the situation."

Potential production disruptions in extruded and rolled products operations. While bauxite & alumina and primary metal production was reported "running as normal," the company's extruded and rolled products operations were reported facing "production challenges and temporary stoppage at several plants" due to the inability to connect to production systems.

Hydro added that it "is doing its utmost to limit the impact on customers."

Hydro is the world's largest producer of aluminum extrusions, reporting in 2018 external sales of 1.40 million mton, with about one-half coming from more than 17 facilities in North America (USA, Canada and Mexico); in addition to a significant presence around Europe (facilities in Belgium, Denmark, Estonia, France, Germany, Hungary, Italy, Lithuania, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Spain, Sweden, and UK) and South America (Argentina and Brazil).

Hydro is also one of the world's largest producers of aluminum rolled products,with external sales in 2018 of 0.95 million mton, produced mainly in Germany (83%) and Norway (17%). This includes Hydro's 50% stake of Alunorf, in the world's largest aluminum rolling and casting plant, in Neuss, Germany.

Impact on LME prices. At face value, today's cyber-attack and its negative impact onHydro's downstream operations (which temporarily reduces demand for primary/secondary aluminum), is if anything, bearish for LME prices and billet spot premiums.

Nevertheless, amid prevailing uncertainty, as of this report, LME 3M aluminum prices were quoted rising by 1% to levels around $1,940 per mton.