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Century Aluminum (CENX) Q1 2019 Earnings Call Transcript

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CENX earnings call for the period ending XXXXXX

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Century Aluminum (CENX 4.00%)
Q1 2019 Earnings Call
April 30, 2019 5:00 p.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Ladies and gentlemen, thank you for standing by. Welcome to the first-quarter 2019 earnings call. [Operator instructions] And as a reminder, this conference is being recorded, and I'll now turn the conference over to our host, Peter Trpkovski. Please go ahead, sir.

Peter Trpkovski -- Director of Financial Planning and Analysis

Thank you, Lori. Good afternoon, everyone, and welcome to the conference call. I'm joined today by Mike Bless, Century's president and chief executive officer; Craig Conti, executive vice president and chief financial officer; and Shelly Harrison, senior vice president of finance and treasurer. After our prepared comments, we'll take your questions.

As a quick reminder, today's presentation is available on our website, We use our website as a means of disclosing material information about the company and for complying with Regulation FD. Turning to Slide 1, please take a moment to review the cautionary statement shown here with respect to forward-looking statements and non-GAAP financial measures contained in today's discussion. With that, I'll hand the call to Mike.

Mike Bless -- President and Chief Executive Officer

Thanks, Pete, and thanks to all of you for joining us again late this afternoon. We always do appreciate it. If you'd turn to Slide 3, please, I'll just give you a quick overview of the last couple months. In just a couple minutes, Pete will give you some data, as he normally does, on the industry fundamentals, but let me just make a couple points here to set some context for the rest of my comments.

It goes without saying we've been operating in a reasonably uncertain environment over the last couple months since we talked to you. Consistent, though, with the recent data that we've all seen over the last couple weeks, our actual trading environment in the U.S. in our markets continues to look good, both current and prospective. That having been said, we continue to believe the metal price is going to be somewhat range-bound here until investors get better direction on the various obvious macro issues that are overhanging us.

Importantly, the alumina price has eased, as we expected. As we've been saying, the market's been really well-supplied since at least the latter part of 2018. Over the last month or two, we've even seen an increasing number of available for-sale cargos looking for homes. You've all noted the recent favorable developments regarding the Alunorte Refinery in Brazil, and we're confident we'll see a further price reaction once final approval and our restart plan is understood by the market.

At that point, the alumina market, especially in the Atlantic Basin, will be meaningfully physically long and, as you know, there's new production set to come online later this year around the world. Bottom line, we continue to see the alumina price at or below historical norms in the reasonably near-term future. Moving along, we had really good performance from the operations during the last few months. We're really proud of our operations books.

I'll give you some detail in just a couple minutes but, at a high level, safety was really good. All the operations are stable and quiet, with good production metrics and efficiencies, and we had really strong performance on controllable costs. We're really pleased to report that the last of the three curtailed potlines at Hawesville is now fully online. That happened a couple months ago.

This complex project was completed in just under a year. That's a bit ahead of schedule. As you know, it also included some capital projects to renew equipment in some of the support departments, and the total project, as we've said, has come in on budget. The new cell design, the new technology that we've been talking to you about, continues to perform above our expectations.

We've got some real industry veterans that have been helping us lead the restart process here as we've been moving up and down the potlines. And these guys report that they've never seen cells start up and reach stability as quickly and easily as these have done. The efficiencies have been better than we modeled, high purity production has been really strong, and all this is really exciting for the future of this plant. As we've planned, we're now turning our attention to rebuilding the two lines that have been continuously operating here for years and years.

These cells, as we've told you, are way past their useful life. As planned, we've now taken down one of those two rebuilding it. We'll continue to run that last line as close as possible to full production until about the end of the year. At that time, the line that we're now rebuilding will be nearly back in operation, and then we'll take down that last line and rebuild it, and then the plant will be at full production.

And all of this is consistent with the production forecast that Craig gave you a couple months ago. Then, we'll turn our attention to the last page of the technology upgrades, the second half of the technology upgrade that we described to you. As a reminder, this is enabled by switching to a more robust anode design. It'll require a few capital projects to be completed in the anode rodding shop to enable the shop to handle that new larger anode.

The return for this project continues to look very attractive, and we'll be considering the timing of it over the coming months. It goes without saying we've been working through this major investment project for our company during some pretty unusual times, obviously. As you'll recall, Alunorte was forced to reduce to half capacity in the waning days of February of last year, and that was literally a couple weeks before we began rebuilding the curtailed capacity at Hawesville. In a couple minutes, Craig's going to share with you some alumina pricing data since the beginning of the decade, since the alumina price index came into being.

And you'll know -- those of you who are familiar with the industry know all this, of course. You'll note that it trades within a reasonably tight range of 15% to 17% of the metal price. And obviously, since early 2018, it's been trading at historically unprecedented levels. As I said earlier, we're convinced the alumina market is now moving back to pricing consistent with historical norms or below.

That said, we're still at a bit of an inflection point today, obviously. It's come down very nicely. It posted at $350 this morning, but we're still not all the way there yet. And for that reason, we've decided to mitigate a little bit of risk here by largely fixing the economics of that one potline at Hawesville that we're now rebuilding.

Through derivatives contracts, we've converted the revenue and alumina costs into fixed values. So synthetically, we've essentially created a fixed EBITDA stream from the new line from the first year of its operation. That'll be 2020, of course. Let me just give you a sense of what we've done here.

Even at current prices, current commodities prices, aluminum and alumina, the economics of doing this are favorable. Just to give you a sense, if you take the restart cost itself, just the cost of rebuilding the cells and restarting them, the payback on that investment basis the EBITDA stream that we've created here is just slightly over a year. It's about 13 months. And if you add in the capital project that I just described, to get the total amount that we'll spend, restart cost plus capital projects, the simple payback is just inside of two years.

It's important to note, we've only fixed, quote-unquote, fixed that EBITDA stream for the first year of operation, but our view in the market is constructive. But if you just use the same EBITDA for both years, as I say, you're talking about a payback with a full investment for this line plus the capital projects of inside of two years. And Craig will give you some more detail on the spending in just a couple minutes. In the interest of some further conservatism here, we've also decided to create some incremental liquidity, again, while the market is at a bit of a turning point here.

As Craig will detail for you, our revolving credit facilities were fully paid in April. That said, again, in order to create a little bit of incremental liquidity, we've entered into a new short-term facility, financing facility, which will finance the potline at Hawesville that's currently being rebuilt, plus those related capital projects about which I spoke. This was by no means required, but we, again, opted to do it just in the interest of conservative financial management. A couple quick comments on the trade environment, and we spoke with you February just after the OECD had issued that report that came out in January.

And hope many of you had a chance to read it, or at least the Executive Summary. If so, you've seen the stark evidence of what we've been talking about here the last couple years. And of course, that's the massive state subsidization in almost all primary aluminum-producing regions. It's obviously detailed confirmation by an independent inter-governmental organization like OECD of why the section 232 tariffs are so necessary and so appropriate.

We continue to see the validation of the administration's rationale behind the trade remedy. Investment in employment continues to pour into the upstream and downstream portions of this industry in the U.S. And of course, this includes our project at Hawesville. And we've seen no evidence of the dire prediction that came from some regarding demand disruption and job losses and things like that in the downstream industries.

In fact, as you've seen the data, growth in those sectors remains really robust. Last, a really exciting development for the company. I hope you noted our announcement yesterday of Jesse Gary's appointment as chief operating officer. Some of you know Jesse.

He represented us long back when he was an attorney at Wachtell Lipton. We convinced him somehow to leave the wilds of New York for the Central California coast. Those of you who know the company, again, know that we were out there. We're still not sure that he's figured out the bait and switch as he takes a train to Chicago every day, but we're happy we got him, whether by honest means or otherwise.

Jesse became our General Counsel in 2013. He's done a terrific job creating a modern, effective and efficient law department. And most importantly, he's built an exceptional team under him, so he's now able to take on this new challenge. He's developed a great understanding of our business and our industry.

He's built trusting relationships inside the company and out with a variety of constituencies. And he's built huge knowledge of the way the industry flows and operates around the globe. Most important, he's a passionate believer in fostering the long-term safety, sustainability, and value of our operations, and our directors and I are really excited to see the value he's going to add working with our senior executive folks. And with that, I will give you back to Pete.

Peter Trpkovski -- Director of Financial Planning and Analysis

Thanks, Mike. If we could move to Slide 4, please, I'll take you through the current state of the global aluminum market. The cash LME price averaged $18.59 per ton in the first quarter, which reflects a 6% decrease from the prior quarter. Aluminum prices have averaged just about $18.60, 6-0, per ton so far in 2019 and are currently sitting right around $18.10.

In the first quarter, regional premiums averaged approximately $0.192 per pound in the U.S., down 1% quarter over quarter and approximately $130 per ton in Europe, roughly flat from the prior quarter. Spot premiums are around $0.19 per pound in the U.S. and $145 per ton in Europe. In the first quarter of 2019, global aluminum demand was roughly flat as compared to the year-ago quarter.

We saw approximately 1% demand growth in the world ex-China and 0.2% demand slowing in China. Global production growth was up a modest 1% in Q1 year over year. We saw no net-production increases in the world ex-China, while China increased production by 2.3% year over year. As a result, for the first quarter of 2019, the global aluminum market recorded a slight surplus of approximately 300,000 tons.

As we usually see this time of year, this was driven entirely by the Chinese New Year holiday. We've already seen this trend start to reverse in the second quarter. An indication of Chinese demand picking is evidenced in the current SHFE price, which has breached RMB14,000 for the first time since October of last year. Looking forward, for the full-year 2019, we continue to expect to see a global supply deficit of at least 1.5 million tons.

This structural aluminum supply deficit should result in the continued de-stocking of inventories and drive higher LME prices over the long term. With that, I'll hand the call back to Mike.

Mike Bless -- President and Chief Executive Officer

Thanks, Pete. If we could just move to Slide 5, please, a couple quick comments as normal on the operations during the last couple months. As I said, we've had a really nice quarter in all the businesses. As you see, we're really pleased with the safety performance.

Sebree bounced back from the couple incidents that they did have during the fourth quarter. Hawesville's continued just a remarkable performance here. It's even more gratifying when you consider the complex restart activity that's been going on in that plant in the last year. We're really, really proud of those folks.

Mt. Holly, again, has continued very good performance. Grundartangi, uncharacteristically, had a couple incidents, two to be specific albeit not serious, in the first three days of the New Year, literally in the first three days of January. Since then, the plant has bounced back to its normal excellent performance.

Moving down the page, production growth you can see is strong. You can see the impact of the Hawesville restart. And you should look again in Q2 for incremental growth over Q1. At Grundartangi this year, we have a generation of cells up for normal reline activity.

That's simply based on when the cells were put in service. And the number that will need to be relined this year is bigger, about 50% bigger than a normal year. That'll impact at the margin production, production efficiencies and per-metric-ton cost throughout the year. And that, of course, was all built into the production and cost estimates Craig gave you a couple months ago.

Production efficiency metrics again continue to be good. You're seeing continued consistent improvement from Sebree, and starting to see some real efficiencies from the Hawesville restart. Conversion cost, again, we had an exceptionally good quarter, just give you some detail here, really across the board, as you can see. Sebree maintenance and pipelining expense, down 20%.

Hawesville, you're really starting to see the efficiencies that the additional volume that was part of the IRR in that project, so you're starting to see those efficiencies come through. I'll give you some examples. Labor cost, down 11% quarter over quarter, contract services reduced by half, maintenance and potlining expense down 30%. Team at Mt.

Holly continues to do a really fantastic job at that plant, labor cost down 7%, maintenance cost down 20%. As you remember, we caught up on some deferred maintenance at Mt. Holly during the fourth quarter. And Grundartangi, 100%, all of that increase, again, is just the increased potlining expense due to the increased cells that are being relined this year.

And with that, I'll give you to Craig.

Craig Conti -- Executive Vice President and Chief Financial Officer

Thanks, Mike. Let's turn to Slide 6, and I'll take you through the high-level results for the first quarter. On a consolidated basis, global shipments were up 4% quarter over quarter, driven by continued progress on the Hawesville restart, as Mike detailed earlier. The realized prices were down 6% as a result of lower lag LME prices.

Looking at operating results, adjusted EBITDA was a loss of $44 million in this quarter, and we had an adjusted net loss of $67 million, or $0.70 per share. In Q1, the primary adjusting items were $4.3 million related to the Sebree equipment failure and $35 million for net realizable value inventory adjustments. Let me give you a little detail on the Sebree adjustment. As a reminder, we expect to fully recover all associated losses from our Q2 2018 line outage from our insurance policies net of our $7 billion deductible.

As we mentioned last quarter, we will continue to call out the associated P&L impacts and cash receipts as they occur. In Q1, we received $4.4 million worth of proceeds on our insurance claim, bringing our total recovery to date to $12.4 million. We expect to receive the balance of the claim proceeds in the coming months. Our liquidity remains strong, with $174 million of funds available via a mix of cash on hand and revolving credit facilities.

As expected during Q1, our cash balance decreased by $17 million, partly driven by the investment in the restart of the idled Hawesville production. As a reminder, our lower adjusted EBITDA reflects lagged alumina prices and was mostly offset by reductions in working capital as a result of falling alumina prices. I will share more detail on the cash bridge shortly. Availability under our revolving credit facilities is $152 million, which is largely flat with Q4.

While we did have an outstanding balance at the close of Q1, our credit facility was fully repaid during the month of April. Let's go to Slide 7, and I can walk you through our quarter-to-quarter bridge of adjusted EBITDA. The $26 million decrease versus Q4 adjusted EBITDA of negative $18 million was largely driven by lower LME prices and regional premiums as we forecast at our last call. On a lag basis, LME was down $129 per ton, and the U.S.

Midwest premium and European duty-paid premium were both down about $26 per ton, which in sum drove $31 million of decreased EBITDA during the quarter. Realized alumina price was approximately $12 per ton higher than Q4, driven by timing of inventory receipts, which resulted in about $7 million of decreased EBITDA during the quarter. Power prices, particularly in the U.S., were a benefit to sequential EBITDA of $12 million versus Q4. Looking ahead to the future, it's important to point out that alumina prices have dropped significantly in 2019 from our Q4 and Q1 realized prices of about $500 per ton to $350, 3-5-0, dollars per ton at current spot prices.

The resultant $150 per ton reduction in alumina equates to an approximate $290 per ton decrease in aluminum production cost. As a reminder, alumina impacts our P&L on an approximate three-month lag, so we will see the favorable EBITDA impact of this cost reduction beginning in Q2 and continuing into Q3. I will share some additional details on alumina in a few moments. Looking ahead to Q2 specifically, the lagged LME is down $36 per ton, and both the lagged U.S.

Midwest and European delivery premiums are about flat to Q1 levels. Most notably, we expect our realized alumina to be down $100 per ton to a realized value of approximately $400 per ton. These items translate to a net improvement of $35 million to $45 million in EBITDA from Q1 levels. Let's turn to Slide 8, and we'll take a quick look at cash flow.

We started the quarter with $39 million in cash and ended March with $22 million. During the quarter, we had $6 million of spending associated with the Hawesville restart, and we spent $9 million for all other companywide capex. We had $12 million of additional borrowings on our revolver during the quarter, and while this was outstanding at quarter end, this facility was fully paid down within the month of April, as I mentioned earlier. Finally, we saw marked improvement in working capital in Q1, which helped generate $26 million of cash.

The improvement was largely driven by a reduction in inventory. Looking ahead on cash, we have commenced the rebuild of the first of the two continuously producing lines at Hawesville, as Mike mentioned earlier. We anticipate spending approximately $40 million over the next several quarters, which will maintain a four-line operation consistent with what we shared with you on our last call in terms of production volume and conversion cost for 2019. This investment is to both rebuild the line and to complete additional technical projects to further enhance productivity of the overall plant.

To close out today's presentation, we'd like to share a page on alumina and discuss how its pricing impacts our business. Turning to Page 9, you can see the alumina price and the resultant percentage of LME for the last nine years. As we have discussed in the past, the historical relationship of alumina to the LME price has averaged 17%. As you can see on the chart, the data suggests that there has been a relatively narrow band around that relationship until recent history.

Two major events in early 2018, the Alunorte curtailment and the RUSAL sanctions, drove alumina to a historic high of over $700 per ton, or about 32% of the LME price. Fast forwarding to today, the spot price is $350 per ton, or 19.3% of the LME spot price. As we think about the spot price today, it's important to know that, while it's come down from its 2018 peak, it is still significantly elevated from its historic norm. Looking forward, we expect new alumina capacity to come online in 2019 in various places around the world.

In addition, as Mike mentioned earlier, there appears to have been significant regulatory process made toward a restart of the curtailed portion of the Alunorte refinery in Brazil. While we cannot predict how or when this will be resolved, we are confident that, as production of the appropriately 3 million tons of currently offline capacity comes back into the market, it will further reduce the global alumina price and help bring it back in line with the historical percentage of LME relationship. Consistent with industry experts, we continue to believe that the long-term value of alumina with respect to the LME is in the range of 17%. At today's LME spot price of $1,809 per ton and today's alumina spot price of $350 per ton, we are go-forward EBITDA and free cash flow positive despite the relationship between alumina and aluminum still being well above historical norms at 19.3%.

To illustrate how alumina pricing impacts our business, let's take our last 12 months adjusted EBITDA, which totals to $21 million. Over this period, the alumina price averaged $480 per ton, or about 23% of LME. If we take that result and apply the historical 17% relationship of alumina and LME, it's $192 million accretive over the same period. In other words, had the last 12 months been in line with historic alumina pricing, we would have had a trailing adjusted EBITDA of $213 million.

This concludes our prepared remarks. Thank you for your time and attention. I'd like to turn the call back over to Lori to begin the question-and-answer session. Lori? 

Questions and Answers:


[Operator instructions] Our first question from the line of Jeremy Kliewer with Deutsche Bank. Please go ahead.

Jeremy Kliewer -- Deutsche Bank -- Analyst

Hey, good evening.

Mike Bless -- President and Chief Executive Officer

Hey, Jeremy.

Jeremy Kliewer -- Deutsche Bank -- Analyst

You guys had some pretty good realized pricing on a per-ton basis, a little bit better than what we were anticipating. I was just wondering, could you touch on how much value-added products did you guys put out this quarter? Is it a little bit more than your typical 84,000 per quarter, or was there additional high purity out of Hawesville, or what's going on there?

Peter Trpkovski -- Director of Financial Planning and Analysis

Thanks, Jeremy. The only thing I can point to is that, as we told you some time toward the latter parts of last year, we did make the small investment to create incremental value-added capacity at Sebree. And so, going forward, you're going to see a richer mix. That was the point of it.

And we're realizing that in the marketplace today. So that's on the volume side. You didn't ask, but just to be constructed on the premium side, product premiums are holding up pretty well in the U.S. And so, through that kind of mixture of decent premiums and incremental value-added volume, perhaps what you're seeing in comparison to what you had expected.

Jeremy Kliewer -- Deutsche Bank -- Analyst

And then to tag onto that, the CRU, or the kind of industry demand that you guys pointed out, it's come down a little bit, so supply. So I didn't know, has there been any increase for -- whether billet or slab or anything in particular that you guys are producing that you may be able to see a little bit of a price appreciation later this year?

Mike Bless -- President and Chief Executive Officer

I'm sorry, I didn't get the linkage in the question, Jeremy, from the CRU data to our mix.

Jeremy Kliewer -- Deutsche Bank -- Analyst

Yeah, yeah, the global demand, right, it's relatively flat. I mean, the balance has come down a little bit. I didn't know if you're seeing any additional demand for a billet or slab from some of your customers versus other products that wasn't there three months, or two months ago.

Mike Bless -- President and Chief Executive Officer

I see it. I'm sorry. I get it, I get it. No, I guess on the billet side, the extrusion business continues to be strong, and that's what we're seeing.

And again, that's reflected in spot premiums. As you know, there's not a lot. Most of these trade at at least one-year contracts, but there is a decent spot market that is a reasonable gauge, for what it's worth, of the supply demand equation. And things have stayed reasonably good, and it's consistent with when you look at the data that's published on year-over-year growth in the downstreams in all the sectors.

You're seeing evidence of it.

Jeremy Kliewer -- Deutsche Bank -- Analyst

Right. Thanks. I'll jump back queue.

Mike Bless -- President and Chief Executive Officer



Our next question from the line of David Gagliano with BMO Capital Markets. Please go ahead.

David Gagliano -- BMO Capital Markets -- Analyst

Hi, thanks for taking my questions. First of all, the commentary about locking in some volumes, can you just give us the EBITDA that you locked in and what the volume is for the first potline again?

Mike Bless -- President and Chief Executive Officer

Sure. It's pretty easy. So let's just -- we can deconstruct it for you. So as you know, each potline at Hawesville has a rated capacity of 50,000 tons, so it's just a little bit shy of 50,000 tons.

As Craig told you, the total project is $40 million, of which just slightly over half is the cost of rebuilding and restarting the cells itself, and the rest is the various capital projects. And then, as we said, the simple payback is two years, so it's pretty simple math. It's about $20 million of incremental EBITDA. Again, I'll stress one more time, for the first year only is what we've locked that in for, and we've thus far let it flow for the second year because, again, our view is and has been and continues to be, and has been proven correct thus far, that not only will absolute alumina prices continue to fall, but as Craig correctly said, the relationship between LME price will continue to improve from our basis.

So I guess I'll stop there. You can redirect, but I think that answers the question.

David Gagliano -- BMO Capital Markets -- Analyst

Yes, that's helpful. So it's 50,000 tons, I mean, for lack of a better term on my side, effectively sold forward, I guess, starting when?

Mike Bless -- President and Chief Executive Officer

2020 is when this line will be back in production, right?

David Gagliano -- BMO Capital Markets -- Analyst

And then just switching gears, if we go back to the fourth-quarter presentation call, there's just a couple things I wanted to ask about just in terms of an update here. At the time, there was an indication of annual EBITDA run rate of slightly below $150 million during 2Q to 4Q. I think that was the comment. Are those still your expectations?

Mike Bless -- President and Chief Executive Officer

Number one, everything we had in there are still our expectations. Those cost estimates are still good. Those production estimates are still good. Everything we've done, as I said, is consistent with what we had in there, rebuild of the line, the restart of the lines.

everything else is still consistent. That $150 million, obviously I can't place it because it was basis a price deck at the time that we were obviously talking about. I don't know what you're using there, but I can tell you that everything in there is still consistent with our expectations. So if you use whatever price deck you wish for metal and for alumina, you should get that number, yes.

David Gagliano -- BMO Capital Markets -- Analyst

That's helpful, so no change to the operating targets that you laid out two months ago?

Mike Bless -- President and Chief Executive Officer

No change. I could have stopped right there. No change.

David Gagliano -- BMO Capital Markets -- Analyst

And then just a last question from me. When I look at the first-quarter results just for a second, if I look at the table in the press release, selected operating data, it shows total net sales of $473 million. And then on the income statement, it says total net sales of $490 million. Historically, those two numbers were much, much closer.

And I'm just wondering why this quarter the income statement was $17 million higher on the revenue line than [inaudible].

Craig Conti -- Executive Vice President and Chief Financial Officer

A This is Craig. Just quickly, what those are are very low margin approaching pass-through alumina sales, right? So given our unique relationships with alumina producers, it's a part of volume buying that we're doing where we'll procure on others' behalf, and then send that alumina out into the market.

Michael Bless -- Chief Executive Officer and President

There's always been, David, as you noted, a slight difference, and that slight difference until now has been scrap sales, right, as Craig correctly said. And so the distinction is between, quote-unquote, primary aluminium and scrap sales, because we don't process all of our own scrap or RSI. We do sell some of it in the merchant market. But then, as Craig said, with a new alumina contract, we are doing some back to backs here.

It's complete pass-through, as you said, so there's no margin on those sales. It just accounts for it -- the accounting for it result in a little bit of revenue.

David Gagliano -- BMO Capital Markets -- Analyst

Alright, great. Thanks, helpful. Thank you.

Mike Bless -- President and Chief Executive Officer



[Operator instructions] We'll go to Lucas Pipes with B. Riley FBR. Please go ahead.

Lucas Pipes -- B. Riley FBR, Inc. -- Analyst

Thank you, and good afternoon, everybody.

Mike Bless -- President and Chief Executive Officer

Hi Lucas.

Lucas Pipes -- B. Riley FBR, Inc. -- Analyst

I wanted to follow up a little bit on the second-quarter comments that you made during the prepared remarks. It sounded like, if I understood it correctly, that you expect to realize a $400 alumina price, and that would be, again if I understood correctly, about a $30 million EBITDA benefit. Chris, could you kind of confirm those? And then, secondly, what other moving pieces should we be considering just in terms of kind of a quarterly bridge for the second quarter versus the first quarter? Thank you.

Craig Conti -- Executive Vice President and Chief Financial Officer

Yes, sure. So I will confirm that that $400 realized alumina -- now, remember, we're at spot $350 today, but on a three-month lag, we're coming off a quarter with realized prices of $512. So that is a large benefit. As we look at where we expect EBITDA to fall in that $35 million to $45 million range, alumina is definitely a large part of that.

I would say your view on LME is as good as mine, so using the sensitivities that we gave you on our annual call last quarter would probably be a good way for you to triangulate that number.

Lucas Pipes -- B. Riley FBR, Inc. -- Analyst

And then kind of circling back on the alumina price, I think you also mentioned it is going to be down $100 second quarter versus first quarter. So can we deduct that the realized price of alumina in the first quarter was about $500 per ton?

Craig Conti -- Executive Vice President and Chief Financial Officer

That's correct.

Lucas Pipes -- B. Riley FBR, Inc. -- Analyst

That's helpful, thank you. And then switching to your outlook, I appreciated all the detail as it relates to the ratio of alumina to aluminum. What I wanted to maybe hone in a little bit is in regards to aluminum prices. I think there's a concern in the market that, as alumina drops, aluminum kind of will drop in lockstep.

What's your view on that? And how do you see the aluminum price kind of evolve over the course of this year?

Mike Bless -- President and Chief Executive Officer

Thanks, Lucas. There's been a lot written on both sides, obviously. Our view is that the LME price, and Craig commented on the SHFE, the LME price -- the aluminum price is going to find its level of where it needs to be based on the supply demand balance. And there I guess you really need to look -- one needs to look to one's view of the larger macro issues, Chinese economy, trade, etc., etc.

There was a very good article. We don't usually like to cite publications, but there's a very timely article in the FT this morning, actually, print edition, talking about the case for a much higher LME price, again given the developing -- both supply and demand with the emphasis, as you would expect, on China. So the LME is going to -- or the metal price is going to find where it believes it should be. Our view is that talking to market participants over the last month or so is that a bunch of technical factors, traders, whatever, however one wishes to say it, have kind of conspired here over the last couple weeks to exert some pressure on it.

But our view is I think consistent with a lot of market participants that it's somewhat temporary. And then, so put that aside. The metal price finds where it's going to be. And then I'd go back to Craig's comments, which are, we believe strongly long term, is that a 17% ALA price -- this is not a particularly proprietary view.

I think a lot of folks have this view -- is a pretty full ALA price, and that, given where we're heading on the supply/demand on ALA specifically in the Atlantic Basin over the coming year, our view is even that it should trade reasonably well below that for a period of time just because you're going to have a lot of alumina flooding the market. People are writing about tsunamis of alumina. We're not quite that boisterous in our commentary, but you are now seeing, if you just are following the daily trade, and the data are out there if you subscribe to the services, you're seeing cargos offered for sale that have no takers, and the price is continuing to drop.

Lucas Pipes -- B. Riley FBR, Inc. -- Analyst

Very helpful. I'll take a flood of alumina to start.

Mike Bless -- President and Chief Executive Officer

You and we both.

Lucas Pipes -- B. Riley FBR, Inc. -- Analyst

I appreciate it. Maybe if there's time, I'd quickly follow up on my first question. Did you guide to $540 for alumina for Q1? And what would account for the difference if it came in at $500?

Craig Conti -- Executive Vice President and Chief Financial Officer

No, I don't think we guided up. I think we guided flat to where we were in Q4.

Peter Trpkovski -- Director of Financial Planning and Analysis

This is Pete. On the last call, we said that alumina realized prices would be flat quarter over quarter, Q3 to Q4, and Craig commented they were slightly higher, less than -- about $10 per ton due timing of shipments.

Lucas Pipes -- B. Riley FBR, Inc. -- Analyst

So flat, and how about Q1 versus Q4? Is that what you meant?

Peter Trpkovski -- Director of Financial Planning and Analysis

Yes, Q1 versus Q4.

Craig Conti -- Executive Vice President and Chief Financial Officer

Yes, Q1 -- Q4 was flat. Q3 to Q4 flat as well. It's been at that $500 level. It's been within a $10 band at a realized basis for the last three quarters, with the exception going into Q2, where we see it getting down to $400 on a realized basis.

Lucas Pipes -- B. Riley FBR, Inc. -- Analyst

Appreciate all the detail. Thank you


We have no additional questions in the queue, so please continue.

Mike Bless -- President and Chief Executive Officer

Thanks very much, as always, for your interest and participation, and we look forward to developments over the coming couple months and talking to you again in July, if not before. Take care.

Craig Conti -- Executive Vice President and Chief Financial Officer

Thank you.


Thank you.[Operator signoff]

Duration: 40 minutes

Call Participants:

Peter Trpkovski -- Director of Financial Planning and Analysis

Mike Bless -- President and Chief Executive Officer

Craig Conti -- Executive Vice President and Chief Financial Officer

Jeremy Kliewer -- Deutsche Bank -- Analyst

David Gagliano -- BMO Capital Markets -- Analyst

Michael Bless -- Chief Executive Officer and President

Lucas Pipes -- B. Riley FBR, Inc. -- Analyst

More CENX analysis

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