Century Aluminum: A Tale of Contradictory Market Forces

Century Aluminum US1564311082

Shares of aluminum producer Century Aluminum are navigating a complex landscape of conflicting signals. The company's latest quarterly results and strategic moves paint a picture of an organization grappling with operational headwinds while simultaneously being buoyed by protective tariffs and a tightening global market.

Century Aluminum's production footprint is undergoing significant change. A recent electrical fault at its Grundartangi smelter in Iceland forced two-thirds of the facility's production offline. Management estimates the restart process will require 11 to 12 months to complete.

Conversely, the company is embarking on a major capital project to revive idled capacity. It is investing approximately $50 million to restart over 50,000 tons of production at its Mt. Holly plant in South Carolina. Full output is targeted for June 30, 2026—a level not seen since 2015. This strategic restart is economically viable largely due to the 50% Section 232 tariffs on aluminum imports, which shield domestic producers. A power supply agreement extension with Santee Cooper through 2031 secures the necessary energy for the operation.

Q3 2025 Earnings: A Mixed Bag

The financial report for the third quarter of 2025, released on November 6, underscored the company's dichotomous position. Revenue reached $632.20 million, a 0.7% year-over-year increase that surpassed the consensus forecast of $629.85 million. However, earnings per share (EPS) of $0.56 fell short of the $0.79 analysts had anticipated.

Adjusted EBITDA came in at $101 million, primarily driven by a higher Midwest premium. Net income was reported at $15 million, or $0.15 per share. The firm's liquidity position strengthened considerably, rising by $125 million to a total of $488 million, with cash and equivalents accounting for $151 million of that sum. Shipments declined quarter-over-quarter to approximately 162,000 tons, attributed to instability at Mt. Holly and the transformer failure in Iceland.

Institutional Investors Diverge

Activity among major investors reveals no clear consensus. During the second quarter, Quantbot Technologies LP significantly reduced its stake by 65.8%, selling 79,498 shares. In a contrasting move, Soviero Asset Management LP established a new position, acquiring 190,000 shares valued at roughly $3.424 million. This investment makes Century Aluminum the 19th-largest holding in Soviero's portfolio, representing about 2.1% of its assets.

Supportive Macroeconomic Backdrop

The fundamental global supply-demand picture provides a tailwind. Market experts project a worldwide aluminum deficit of 100,000 tons for 2025, potentially widening to around 200,000 tons in 2026. This tightening is fueled by capacity constraints in China and power shortages elsewhere, which are limiting supply growth.

A key indicator, the US Midwest Premium (MPW), surged to $1,600 per tonne in September 2025—a 105% increase over six months directly linked to the elevated tariffs. Against this backdrop, analysts project an average aluminum price of $2,900 per tonne for 2026.

On the balance sheet, Century Aluminum recently refinanced its 7.50% Senior Secured Notes, replacing them with new notes carrying a 6.875% interest rate. This financial maneuver extends the maturity to 2032 and is expected to reduce interest expenses.

Analyst Outlook and Share Performance

The consensus analyst rating remains a cautiously optimistic "Moderate Buy," with an average price target of $33.00. Several firms have revised their targets upward, reflecting expectations for benefits from both tariffs and production restarts. The stock currently trades about 9% higher than its level from two weeks ago, though it has seen slight recent softening. The market's next focal points will be operational progress at Mt. Holly and the trajectory of underlying aluminum prices.