Novelis Restarts Key Plants Shuttered by September 2025 Fires
1h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
novelisaluminum
Fazen Markets Editorial Desk
Collective editorial team · methodology
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SeekingAlpha reported on 10 June 2026 that Novelis will restart the key aluminum rolling mills in Alabama and Kentucky shuttered by fires in September 2025. The fires had idled an estimated 15% of the firm’s North American flat-rolled aluminum capacity, creating a significant bottleneck for automotive body sheet and can stock. The restart process is expected to take several weeks, with full production ramp-up likely extending into the third quarter. The announcement came seven months after the initial disruption, which was one of the most severe single-event supply shocks to the North American aluminum market in a decade.
The North American aluminum market remains in a structural deficit, with demand for lightweight automotive sheet and sustainable beverage packaging outpacing primary production growth. The last comparable supply disruption of this scale was the 2018 U.S. sanctions on Rusal, which removed 7% of global supply and sent the LME aluminum price up 35% over six weeks. The Novelis fires removed critical downstream capacity, exacerbating the deficit for high-value, finished products rather than raw metal. The current macro backdrop features elevated auto production schedules and sustained capital investment in electric vehicle battery plants, all requiring specialized aluminum alloys. The primary catalyst for the restart is the completion of extensive repairs and replacements of heat-treatment furnaces and rolling mill components, which are custom-built and have long lead times.
The two affected facilities in Oswego, Kentucky and Fairhope, Alabama have a combined annual capacity of approximately 900,000 metric tons of flat-rolled aluminum. This represents nearly 5% of total North American flat-rolled production. During the outage, the premium for automotive-grade aluminum sheet in the U.S. Midwest widened by $450 per metric ton, peaking at a $1,850 premium over the LME cash price in March 2026. This compares to a typical historical premium range of $1,000-$1,400. A comparison of market indicators before and after the fires illustrates the shock’s magnitude.
| Metric | Pre-Fire (Aug '25) | Post-Fire Peak (Mar '26) | Change |
|---|---|---|---|
| U.S. Auto Sheet Premium | $1,200/mt | $1,850/mt | +54% |
| Novelis EBITDA (Q4 est.) | $650M | $520M | -20% |
| Can Stock Spread (vs. P1020) | $1,100/mt | $1,500/mt | +36% |
U.S. aluminum futures (CMX) are trading at $2,750 per metric ton, up 12% year-to-date, outperforming the 5% gain for the S&P 500 Materials Select Sector Index.
The restart is a direct positive for automakers like Ford and General Motors, which faced margin pressure from elevated input costs. It is also favorable for beverage can manufacturers like Ball Corporation and Crown Holdings, which compete for similar rolling mill capacity. A normalization of premiums could improve these firms’ gross margins by 50 to 150 basis points over the next two quarters. Conversely, the easing of the supply constraint is a near-term headwind for other integrated aluminum producers like Alcoa and Kaiser Aluminum, which benefited from the tight market and elevated premiums. These firms may see revenue headwinds of 2-4% on their rolled products segments. A key limitation to this bearish view for producers is that the broader global aluminum market remains in deficit, supported by Chinese demand and production cuts in Europe, which may cushion any price decline. Positioning data shows commodity trading advisors and macro funds had built significant long positions in aluminum futures during the disruption; some profit-taking on the restart news is likely.
Market participants will monitor Novelis’s weekly operational updates for the restart timeline and confirmation of ramp-up rates. The Q2 2026 earnings reports for major automakers, starting 15 July, will provide the first clear read-through on margin impacts from easing input costs. The next monthly U.S. durable goods orders report on 26 June will offer data on aluminum-intensive manufacturing demand. Key price levels to watch include the $1,600 per metric ton level for the U.S. auto sheet premium, a 50% retracement of the post-fire surge, and the $2,650 support level for the CMX aluminum front-month contract, which represents its 200-day moving average. If Chinese stimulus measures announced in late May fail to spur construction demand, the global aluminum price could test lower supports despite the Novelis restart.
The restart is a near-term headwind for aluminum-focused ETFs like the iShares U.S. Basic Materials ETF (IYM) and the Invesco DB Base Metals Fund (DBB), which hold futures or producer equities. These funds rallied on the supply shock and may see a period of consolidation. The impact will be more pronounced on DBB, which tracks futures, than on IYM, which is a broader basket of materials stocks. The long-term thesis for aluminum in energy transition remains intact, but ETF flows may shift temporarily.
The 2025 Novelis fire was a downstream fabrication disruption, unlike the 2018 Rusal sanctions which hit primary production. Downstream shocks are typically shorter-lived but cause sharper price spikes in specific product premiums, as seen with the 54% surge in auto sheet costs. The 2011 Fukushima disaster also disrupted Japanese rolling capacity, causing a 40% premium spike for can stock in Asia that took over a year to normalize fully.
Prior to the 2025 fires, U.S. aluminum rolling mills operated at an average utilization rate of 92% from 2020-2024, reflecting the tight market. During the Novelis outage, industry-wide utilization spiked to an estimated 97%, creating severe bottlenecks. A return to the low-90s range would indicate the market has normalized, which historically correlates with premium spreads 20-30% below their crisis peaks.
Novelis’s plant restart removes a major, seven-month supply constraint for automotive and packaging aluminum, shifting pricing power back to manufacturers.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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