Norsk Hydro sees solid demand ahead as Q2 tops forecast

Norsk Hydro, one of the world's biggest aluminium makers, said it expected solid demand growth and weak prices this year as it reported a smaller-than-expected drop in April-June core earnings.

Its primary metals unit outperformed expectations in the quarter, compensating for increasing losses in the Bauxite and Alumina division, that was hit by a power outage at its Brazilian Alunorte refinery in addition to low prices.

Hydro repeated on Thursday that it sees global primary aluminium demand, excluding China, up by 2-4 percent his year, after hitting a low in 2012.

Global aluminium production has continued to rise despite prices falling to levels not seen in four years. LME aluminium stayed below $2,000 per tonne during the second quarter.

The Norwegian firm's underlying operating profit fell to 518 million crowns ($86.30 million) from 531 million crowns in the year-ago period, beating expectations for 401 million crowns seen by analysts.

Hydro said it had sold forward around 50 percent of its expected primary aluminium production for the third quarter of 2013 at a price level of around $1,850 per tonne, excluding volumes from its Qatalum plant in Qatar.

LME prices have fallen some 13 percent this year to just above $1,800 per tonne while average daily production outside China at about 70,000 tonnes per day is largely unchanged from last year, according to data from the International Aluminium Institute.

Meanwhile, production in China - the world's biggest aluminium producer - has continued to rise. ($1 = 6.0026 Norwegian crowns)