Novelis’ Q3 FY2026 is about two forces pulling in opposite directions – high premiums lift net sales, Oswego fire dents EBITDA and income

The US-based aluminium rolling and recycling major, Novelis Inc., a subsidiary of Hindalco Industries, has reported its financial results for the third quarter and the first nine months of FY2026 against the backdrop of the prolonged shutdown of its Oswego plant following a fire outbreak. Over the past five months, Oswego has dominated headlines for remaining offline and disrupting supply chains. Against this challenging backdrop, Novelis’ financial disclosures attracted heightened scrutiny, especially after Steve Fisher, President and CEO of Novelis, described the performance as ‘resilient’.

That resilience has, however, remained selective, particularly thanks to the beverage packaging sector that has helped Novelis navigate a turbulent quarter. Also, elevated aluminium premiums in the US have supported Novelis in overcoming the tariff-related hit, said Satish Pai, Managing Director of Hindalco Industries. Notably, the Midwest premium, which is the additional price paid by buyers in the US over the global aluminium price, is one of the key factors for Novelis’ strong net sales in this quarter.

Mr Pai explicitly said, “The tariff impact for us is steadily going down… with the Midwest now running at around $2,200, it would be fair to say that going into next year, we should not be seeing any tariff impact at all.”

US Midwest premiums – the driving force for Q3

In early December, the US Midwest premium jumped 5.44 per cent overnight from USD 1,841 per tonne to USD 1,941.17 per tonne and closed the month even higher at USD 1,971.09 per tonne. Year-to-date, the price has seen a havoc surge from around USD 500 per tonne. The premium influences the prices Novelis can charge for finished products such as beverage cans and auto sheets, and therefore its margins over the cost of scrap aluminium it uses as input.

This has led to a 3 per cent Y-o-Y rise in Novelis’ Q3 net sales to USD 4.2 billion, despite an 11 per cent decline in rolled product shipments. For the entire nine months, Novelis’ net sales totalled USD 13,647 million, up by 8.64 per cent from USD 12,562 million. Shipments in Q3 FY2026 amounted to 809,000 tonnes versus 904,000 tonnes in the prior year, while that in nine months totalled 2.7 million tonnes – down by 3.6 per cent from 2.8 million tonnes during the corresponding period of the previous year.

The Oswego fire outbreak sat at the heart of the shipment volume decline. Aluminium rolled product shipments from Oswego were 72,000 tonnes lower than expected, resulting in an estimated negative pre-tax $54 million impact on Adjusted EBITDA and Net loss. North America, which was Novelis’ main destination for aluminium rolled products shipments, saw a plunge of27.2 per cent in volume from 360,000 tonnes to 283,000 tonnes, resulting in Adjusting EBITDA drop from USD 122 million to USD 94 million. As per the report, Novelis' total Adjusted EBITDA during Q3 was USD 348 million, down 5 per cent Y-o-Y, impacted by an estimated negative USD 54 million due to production interruptions at Oswego and $34 million owing to tariffs. The Q3 Adjusted EBITDA is even lower than USD 422 million in Q2. In nine months, the company’s Adjusted EBITDA totalled USD 1,186 per tonne, down by 10.8 per cent from USD 1,329 per tonne.

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Oswego fire outbreak leaves a scar

While robust aluminium prices supported Novelis’ fiscal performance on metrics such as net sales, the fire outbreak at Oswego weighed on the overall results. For instance, the company’s net income attributable to common shareholder was a loss of USD 160 million in Q3 FY2026, compared to a net income of USD 110 million in the prior year. Novelis accounted for USD 327 million in pre-tax net losses related to the Oswego fires, as well as unrealised losses on derivatives in the current year compared to gains in the previous year.  Net cash used in operating activities was an outflow of USD 90 million in the first nine months of fiscal year 2026, compared to a net cash inflow USD 263 million in the prior year period, largely related to impacts from the Oswego fires.  Adjusted free cash outflow was USD 1,641 million in the first nine months of fiscal year 2026, compared to the prior year period outflow of $915 million, again due to Oswego disruptions.

Five months on, aluminium production at the Oswego facility is yet to resume. As a result, Ford that depends on Novelis for aluminium rolled products suffers from production loss of up to 100 thousand F-Series pickup trucks by the end of 2025. To mitigate the impact, the car manufacturer mulls to tap into alternative sources, including its global network of plants and industry partners. Ford executives has updated that the automaker has started obtaining aluminium from other Novelis facilities.

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Summing up

Novelis’ FY2026 performance so far indicates a sharp dichotomy. Elevated aluminium premiums and strong demand from beverage packaging have cushioned net sales and softened the blow from tariffs. Yet, the prolonged outage at Oswego has eroded volumes, profitability, and cash flows, exposing the company’s vulnerability to single-site disruptions. As premiums remain supportive and tariff pressures fade, the pace and success of Oswego’s restart will be pivotal in determining whether Novelis can convert favourable market conditions into a sustained earnings recovery in the coming quarters.