Norsk Hydro’s shares declined 3% in Oslo on Thursday after RBC Capital Markets warned that a tentative U.S.-Canada trade deal could erode the company’s recycling margins.
The proposed agreement would reduce U.S. tariffs on Canadian primary aluminium from 50% to roughly 25%, with lower rates expected for derivative products. Aluminium scrap imports currently face a 10% tariff, giving recycled aluminium a pricing advantage. Canada supplies about half of U.S. primary aluminium imports, while the U.S. depends on imports for roughly 70% of its primary aluminium consumption.
The Midwest premium, a key pricing benchmark for North American aluminium, stands at $2,371 per tonne, equivalent to 73% of the London Metal Exchange cash price. Recycled products benefit from this premium, which embeds the full 50% tariff on primary imports. RBC Capital Markets projects the premium could decline by $300 per tonne to around $2,000 per tonne if the trade deal proceeds.
Norsk Hydro estimates the drop in the premium would reduce its EBITDA by approximately NOK 240 million through lower recycling margins. An additional one-off inventory revaluation loss of NOK 150 million would bring the total impact to about NOK 400 million, roughly 1% of consensus FY2026 EBITDA. For context, the company’s Extrusion division recorded a NOK 700 million EBITDA gain in FY2025 as the Midwest premium surged by approximately $1,400 per tonne.
Norsk Hydro has highlighted demand weakness in its U.S. extrusion end-markets, including transport, automotive, and HVAC&R, since 2025. Any volume recovery is not expected before 2027.
