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Century Aluminum Extends Power Contract for Mt. Holly Smelter

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Century Aluminum Company’s (CENX - Free Report) full-owned subsidiary, Century Aluminum of South Carolina, Inc., has entered into an agreement with Santee Cooper that will enable the Goose Creek, SC plant to continue operating at half capacity. The agreement with Santee Cooper has a term till Dec 31, 2020. However, it can be terminated by Mt. Holly on a notice period of 120 days.

Per the deal, Santee Cooper will continue to service 25% of the Mt. Holly power at a standard cost-based industrial rate. The balance 75% of the power requirement is likely to be sourced from a third-party supplier at market prices that are linked to natural gas prices.

Century Aluminum plans to obtain 100% of Mt. Holly’s power requirements at market rates to enable the smelter to operate at full capacity and generate employment in the future.

Century Aluminum’s shares have lost 30.2% in the past three months compared with the 2.2% decline of the industry.


 

The company, in its second-quarter call, stated that downstream demand in most regions and sectors, particularly in the United States remains strong. This is generating attractive growth in the primary metal consumption. The Section 232 relief implemented by President Trump has also resulted in considerable investment in the primary industry, as noted by the company. It expects the U.S. primary aluminum production to increase roughly 60% year over year by the end of 2018.

The company envisions attractive trading conditions amid recent pricing volatility. Prices of alumina are above the fundamentally supported level, thanks to short-term concerns over actual and potential supply disruptions.

 

Zacks Rank & Stocks to Consider

Century Aluminum currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks worth considering in the same sector are W.W. Grainger, Inc (GWW - Free Report) , Tetra Tech, Inc. (TTEK - Free Report) and Donaldson Company, Inc. (DCI - Free Report) . All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Grainger has a long-term earnings growth rate of 12.4%. The stock has rallied 78.1% in a year’s time.

Tetra Tech has a long-term earnings growth rate of 14%. The company’s shares have surged 36.9% in a year.

Donaldson has a long-term earnings growth rate of 11.5%. Its shares have returned 16.6% in the past year.

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