Norsk Hydro (Sell, TP: NOK50.00) - Aluminium is not a scarce resource
We reiterate our SELL and NOK50 target price, as we expect aluminium prices to return to a fundamentals-backed level of ~USD2,200/t soon. Aluminium prices – in line with copper – have surged twice this year, but we stress that aluminium is not set to become a scarce resource – as may be the case for copper. Copper is a mined metal where the possibility of scarcity has led to a price surge of ~400% since 2000, while aluminium prices have been largely flat in the same period as bauxite is abundant in comparison. We have raised our 2024e EPS by 22% on the recent aluminium price uptick, while our 2025–2026e are largely unchanged.Norsk Hydro is an aluminium group based in Norway. Co. is engaged in the supply of aluminium and aluminium products. Co. supplies casthouse products, such as extrusion ingots, sheet ingots and foundry alloys. Co's customers are active in sectors such as the packaging, lithographic, building, automotive and transport sectors. In addition, Co. is engaged in the production of power in Norway. Its business is divided into six operating segments: Bauxite & Alumina, Primary Metal, Metal Markets, Rolled Products, and Energy and Other and Eliminations.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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