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KPIs of Century Aluminum

Some of the key determinants of our results of operations and cash flow from operations are as follows:

Pricing:
Increases or decreases in primary aluminum prices result in increases and decreases in Century Aluminum revenues (assuming all other factors are unchanged). The company may enter into forward contracts or other hedging arrangements to reduce its price risk, but did not hold any such contracts as of December 31, 2014. The average LME price for primary aluminum for 2014 was $1,867 per tonne, compared to $1,846 per tonne in 2013. The average regional delivery premiums increased in 2014 to $450 per tonne for the U.S. Midwest premium from $244 per tonne in 2013 and $218 per tonne in 2012. The company’s operating results are significantly impacted by changes in the price of primary aluminum and the materials used in its production, including electrical power, alumina, aluminum fluoride and carbon products; and it cannot pass thease additional costs to its consumers. Instead, the company tries to manipulate the prices through the use of fixed costs, negotiating LME-based pricing in some of the raw materials and electrical power contracts.
Power supply agreements: Century Aluminum has put some much effort in negotiating power contracts within the regions they operate in. For example, the company managed to secure a power contract with a local supplier to sell to Hawesville plant at market price. This gives the company some room when it comes to reducing fixed costs so prices of aluminum could be set at competitive level in order to maintain profitability.

References:

Form 10-K for CENTURY ALUMINUM CO. Yahoo! Finance. Retrieved 21 Oct. 2015, from http://biz.yahoo.com/e/150302/cenx10-k.html

Mark O'Hara. Analyzing Century Aluminum's Power Supply Agreements. Market Realist. Retrieved 21 Oct. 2015 from http://marketrealist.com/2015/03/century-aluminum-crashed-4q-earnings-release/

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