Norsk Hydro’s earnings outlook for 2027 is facing mounting pressure from falling aluminium premiums, rising operating costs and easing supply tightness in Europe, prompting Goldman Sachs to downgrade the Norwegian producer from ‘buy’ to ‘neutral’ and reduce its price target from NOK 100 (USD 10.71) to NOK 79 (USD 8.46).
Goldman said weaker premiums and higher costs were making further earnings growth harder to achieve in 2027. The bank also lowered its core earnings (EBITDA) forecasts for 2026 and 2027 by 6 per cent each, citing lower aluminium prices and rising costs.
The changing market conditions come as additional metal from the Middle East reaches the market and Indonesian aluminium supply expands faster than expected, easing European supply constraints sooner than Goldman had anticipated.
Norsk Hydro expects realised aluminium premiums in the fourth quarter to range between USD 550 and USD 600 per tonne, according to Goldman Sachs. Around 50 per cent of sales had already been booked at USD 742 per tonne, the bank said.
Realised premiums increased to USD 673 per tonne in the third quarter from USD 563 per tonne in the second quarter, but the outlook points to a potential reversal as market conditions change.
Goldman said customers were delaying purchases while additional volumes from the Middle East were reaching the market, easing supply tightness in Europe more quickly than expected. Faster-than-anticipated growth in Indonesian supply is adding to the pressure on the market outlook.
The producer is also facing higher costs across its operations. Norsk Hydro expects spot gas purchases at its Alunorte alumina refinery to cost between USD 90 million and USD 110 million in the fourth quarter, following costs of about USD 85 million in the third quarter, Goldman said.
The company’s commercial sourcing and trading unit is also expected to post a loss in the fourth quarter. Goldman attributed the outlook to higher logistics and handling costs, alongside the loss of the Qatar marketing and offtake fee.
The combination of softer aluminium pricing and rising operating expenses has weighed on Goldman’s earnings expectations, leading to the 6 per cent reductions in its core EBITDA forecasts for both 2026 and 2027.