Romanian aluminium company Alro reported a net loss of RON 51 Million (US$15.9M) for the first quarter of 2014. Processed aluminium production increased to 20kt, a 7% increase from 12 months ago. Output of primary aluminium was roughly the same as last Q1.

Although they reduced electricity consumption, the saving could not balance increasing costs and decreased metal price.

Electricity was the major cost. The electricity consumption rate of Alro is about 13,160kwh. However, we estimate their electricity price of 2013 was in the range of $85/Mwh due to additional cost of carbon permits. What does this electricity price mean? Only 30 primary aluminium smelters’ electricity prices in China are in this range, and the corresponding average price of Xinjiang province reaches $32/Mwh) at present.

Relying on the global market was another reason for their troubles. Alro exported about 60% of production to the global market and 80% of that was traded via LME, therefore the LME price had a big impact on company revenue of aluminium section. The average spot price of 2014Q1 decreased to $1,717/t from previous quarter of $1,742/t. Even if Alro improved sales of both primary aluminium and proceeded aluminium products, they still could not offset the losses.

Among their competitors, including Alcoa, Hydro, Dubai, Alba and others, the market will be more challenging for Alro. There are reports they are now planning for partial curtailments to cut energy consumption. Producing more processed products may be a way to relieve stress, but metal price rebound and EU demand recovery are essential for their future.