Good morning, everyone. I am Amábile Silva, Investor Relations at CBA. Welcome to our earnings call related to the third quarter results in 2022. Today we have Ricardo Carvalho, the CEO of the company, and Luciano Alves, the CFO and Director of Investor Relations in the company. We'd like to let you know that this event is being recorded and all participants will only be as listeners during the presentation. We'll start the Q&A session, when all participants will be able to raise their hand through the Raise Hand button to submit their questions by audio or send the questions through the Q&A button. The presentation of this event is available on the investor relations website, where we'll also provide the recording after it's done.
Before we proceed, I would like to mention that some of the statements here are just expectations or trends, and they are based on hypotheses and perspectives of the current management in the company. There could be material results in the results, performance and future events that do not represent forecasts. The real events, the performance of those explicit in these statements as a result of many factors, such as general economic conditions in Brazil and other countries, interest rate and exchange rate levels, protectionist measures in the United States, Brazil and other countries, regulations of general competitive factors globally, regionally or nationally. Now I'll pass on the floor to Ricardo Carvalho who will talk about the main highlights of the third quarter of 2022. Please, Ricardo, you can proceed.
Good morning, Amábile. Thank you, everyone.
Ladies and gentlemen, thank you for being here today with us at this event as we disclose the earnings of the third quarter of 2022. Well, this slide gives a summary of our results, and the third quarter of 2022 was really marked by healthy financial results and earnings and important advances in the ESG fronts and in the company's growth projects as committed to during the IPO. The uncertainties from a political and macroeconomic perspective continued to pressure the LME, which reduced 11% compared to the third quarter of 2021, reaching an average of $2,354 per ton. Despite this decline in the price of aluminum, the increase in the volume sold partially offset the price reduction in the quarter compared to the second quarter of 2021 as well.
The net revenue had a 12% setback versus the third quarter, reaching BRL 2.2 billion, and the volume sold grew 4% compared to the same period last year. The cost of products sold in turn reduced 4%. This important cost management was one of the factors that contributed to the increase of 5% in the adjusted EBITDA, which reached BRL 331 million, and the EBITDA margin also had an increase of 1 percentage point, reaching 15%. It's worth noting that the company was able to reverse a loss of BRL 41 million in the third quarter of 2021 with a profit of BRL 100 million in the third quarter this year.
Generally speaking, the financial highlights, despite an LME that is 11% smaller than the same period last year and the dollar in line with this, with values that are very similar in the first two quarters, we were able to have results that were a lot better this quarter than last year. Besides these financial highlights, it's important to also understand a milestone with the restart of the furnace room three, which makes it feasible for 30,000 tons per year in liquid aluminum capacity, which reinforces our low- carbon aluminum production capacity. It's important to say also that this restarting of this was actually started before what we expected in IPO, which brings in better results than we expected for this project.
During this period, we were also able to complete the conclusion of the purchase and sale of the São Miguel Paulista nickel plant in line with our strategy of really focusing on our core business, which is aluminum. Another important achievement in this quarter was the entry of CBA in the index IBrX 100 of B3 in just one year since our IPO, which is an index that measures the 100 assets that are most significant and most traded in the Brazilian Stock Exchange. About some of the ESG highlights, I'm gonna talk about this a bit more up ahead, but now I want to pass the floor on to Luciano, our IR director. He's gonna give a little more detail on the market and financial performance. Luciano, the floor is all yours.
Thank you, Ricardo.
Good morning, everyone. I will start off with a general panorama of the aluminum market. In this quarter, we had relevant developments on the demand and global supply side. In relation to demand, on the right side graph, you can see there was a slowdown, especially in countries excluding China, where it was pulled by Europe, where conflicts and the energy crisis have really harmed aluminum consumption. In China, the consumption continues to grow due to the major levels of exports and also the recovery of certain sectors like the transportation sector. With this, the global primary aluminum demand grew 0.6% in the third quarter. We had some restarts of some capacity in China, which had been shut down in 2021, which was already expected by the market.
The combination of these factors led to an unexpected 108,000 tons in the global market in this third quarter of 2022. When we look at the last five quarters in the global market, we had a deficit of over 1,300,000 tons. Ever since the beginning of this year, global stocks are below what we consider acceptable in the market. Moving on to the next slide, we're gonna show you how the aluminum prices have been behaving in recent months. Concerns about the growth of economic growth, especially in Europe and in China, and the future demand for aluminum really influenced the market. This represents a drop of 18% when compared to the average in the second and third quarter of 2022.
It's important to highlight that the supply remains quite fragile, especially because China is still facing an energy crisis, and there are risks of further cuts in Europe and other regions because of the high energy costs and input inflation. There's some possible sanctions on Russia's aluminum by LME itself. Another recent factor that also supported the recent increase in the price of aluminum is a sign from the Chinese government saying that the COVID zero policy could be revised and possibly relaxed. The premiums also, as you see on the right side graph, have also been dropping due to the uncertainty with future demand and also the reduction of the international freight. Brazilian premium has been more resilient than others, reflecting more stable and favorable domestic demand scenario than abroad.
On this next slide, I'm gonna talk about the supply scenario in the aluminum industry. Starting off with China, some provinces had faced some problems with power supplies, resulted in some smelter closures. In Hunan, about 20% of the total capacity of 5.4 million tons were closed and should probably not restart this year. This reduction in production is expected to be felt in the next quarter, as we see in the line chart below, and it could increase to 30% of the region's capacity. Hunan is an important province. It represents about 12% of the company's total capacity and has a hydroelectric power source. The low levels of the reservoirs and lower power generation also have the potential to affect other regions that are connected to the grid.
In Europe, the situation is still very critical. More than 1.1 million tons of smelter capacity has already been closed, and the restarts are not expected to happen before 2024, according to some forecasts from CRU. In addition, about 1 million tons of capacity from Europe and the U.S. could be exposed to spot energy prices by 2024 as energy contracts and hedges are shut down, which indicates a possible closing also these capacities in the future. On the next slide, we are looking at the cost curves. When we compare the cost curves to the left side, we can see that the curve in the third quarter is more inclined and has a more proportion of smelters that are operating with costs above the volumes in the previous quarter.
If on one side, the average cost of the industry dropped 3.5% compared to the second quarter of 2022, on the other hand, the average aluminum price dropped 18%, which reflected the increase in the percentage of smelters that are operating with costs above the market prices, going from 20% to more than 50% in the third quarter. On the right side, you can also see that some of the margins in the smelters in China and the rest of the world had a drop and at the lowest level in the last five quarters. The prices of some of the raw materials and inputs, although they are dropping in China and in other countries, the energy prices in other countries has considering all of the different sources, right?
Continue to rise in the annual and quarterly visions. This low level of margins in the industry doesn't seem very sustainable. We also know that even with these extremely low margins, they're a little more resilient at this moment. On the next slide, I wanna talk about the Brazilian market. Domestic demand continues to have healthy levels with growth compared to the second quarter of 2022. It reflects a bit of stability towards the third quarter of 2021 last year when we had a level of demand that was historically high. It's important to highlight the Brazilian aluminum market has some seasonality in the second semester where companies are preparing for the summer period, especially for consumer goods and packaging.
The resilience of the packaging and energy distribution markets really have sustained the aluminum demand in Brazil. In addition, we have the beginning of a positive trend in the construction sector with an emphasis on self-construction. Though the consumer goods sector is still under pressure when compared to the third quarter of 2021, but it's already recovered slightly compared to the second quarter. The highlight in this quarter is really the transportation segment. Aluminum consumption has been driven by light and heavy vehicle production, which increased 32% versus the same period last year and 12% versus the previous quarter, according to data from ANFAVEA, the national OEM association. In this period, there was also an increase in imports, which were encouraged by this drop in the dollar in the second quarter and also by the replacement of inventories along the chain.
The premium, in turn, had a slight drop compared to the previous quarter, but they're still above the levels of the third quarter in 2021. Despite this uncertain future scenario, the CRU consulting company is estimating that the growth in Brazilian demand is about 1% in 2022, in line with the global average, but also considering a high base of the previous year, which was 2021. In the next chapter, I'm gonna talk about the operational financial performance in the third quarter of 2022. In this quarter, we had a 4% increase in total aluminum sales, which were driven by primary and recycling volumes.
In primary goods, the volume sold was 4% higher than in the third quarter of 2021 due to the higher sale of ingots to the aluminum can market and other in Brazil. In addition, the drops dropped 12% driven by lower volume of the consumer goods in processed goods. These new sales were also impacted by the market overall in 2022. On the other hand, we also increased the sale of sheets for important segments such as aseptic and flexible packaging. Finally, in the recycling segment, sales increased 34% compared to the third quarter of 2021 due to the incorporation of the Alux volumes, which contributed with 7,000 tons in the quarter.
Moving on to the next slide, I will now talk about the performance of the financial indicators in this quarter. The net revenue, consolidated reached BRL 2.2 billion in the third quarter, a slight reduction of 2% compared to the quarter of 2021, mainly influenced by the reduction of about BRL 50 million in the nergy business revenue in the comparable periods. In this quarter, we had a lower excess volume of energy for sale due to the lower volume of contract and increase of consumption by CBA. The drop of 11%, the average price of aluminum in the LME in the compared period was partially offset by the 4% increase in volume sold in the third quarter of 2022.
Besides this, in this quarter, we didn't have the impact of the strategic hedge that impacted the third quarter of 2021, which was -BRL 228 million at that period. In the primary segment, net revenue increased 6% this quarter compared to the third quarter of 2021 due to a 4% increase in volume sold and an increase in the average premium of the primary products in the periods compared. In the processed segment, even with a drop of 12% in volumes in this quarter, we had an improvement in the mix, higher volume of the sheets and an increase in the premiums. That also had a drop about 3% in the periods comparable.
The recycling segment also had double the net revenue in the same quarter of 2021 due to higher volumes of sales with the integration of Alux, which contributed to about BRL 100 million in this quarter. On the other hand, there was a reduction of 55% in the revenue from other segments in the third quarter of 2022 compared to the third quarter of 2021 due to the end of the ingot trading operations and lower volumes sold of aluminum referring to the take Alunorte, which could have temporal variations between the quarters due to some logistics aspects.
In relation to the cost of products sold in CBA's consolidated numbers, there was a drop of BRL 76 million in the third quarter of 2022 compared to the third quarter of 2021, influenced by the reduction of about BRL 68 million in the cost of the Energy business, which was not impacted by 2022 by the energy crisis that impacted the results in 2021. Even with the higher volume sold and continuity in the cost inflation in the global industry, the cost of the Aluminum business was remained stable in the quarters, reinforcing CBA's resilience in the cost management and full integration. Now about the adjusted EBITDA, the results of this quarter were BRL 331 million, 5% above the earnings in the same period last year.
EBITDA margin in consolidated in the quarter had an increase of 1 percentage points from 14% to 15%. Finally, CBA recorded net income of about BRL 100 million in the quarter, reversing a net loss of BRL 41 million in the third quarter of last year. Now about the investments for the next slide. The total CapEx in the third quarter is already higher than the accumulated nine months of 2021, with 53% of the investments in the quarter related to CBA's modernization expansion project, which are multi-year and follow the pace predicted in the IPO despite the volatility of the LME. The rest of CapEx is concentrated with 24% in own renovations and refurbishing and 24% under maintenance.
Restarting Potline 3 was a project we anticipated from 2023 to 2022, and we completed this in this quarter, and everything's already under operation. On this next slide, I'm gonna talk about our free cash flow. Even with the advances of CapEx, CBA's free cash flow was BRL 94 million in the third quarter of 2022, with the best performance of working capital as the main contribution to cash generation in this period. The working capital varied positively by BRL 114 million, and an increase of about BRL 182 million in the balance of suppliers in that period, mainly due to the increase in the costs of the main inputs and volumes of main suppliers related to the CapEx at CBA.
In addition to this effect, there was also an increase in the inventory balance of BRL 62 million, with about a BRL 119 million increase due to the inflation of costs of semi-finished products and raw materials. This was, of course, offset by a reduction in the stock of finished products worth about BRL 57 million. On slide 14, I'm gonna talk about CBA's debt profile. CBA's debt remains mostly denominated in dollars. As CBA was able to capture about $96.5 million through bilateral operations to finance our exports at an average cost of SOFR + 3.3% per year and an average term of 5.6 years. These operations were characterized as sustainability-linked loans.
CBA also had the right to withdraw the total balance of the bonds representing about $78.5 million, which contribute to the reduction in the concentration of some of the debt maturities in 2024. The availability of these financial investments re ached BRL 1.6 billion in September 2022, which does not consider the revolving credit line available, representing about $100 million that reaches maturity in 2026, which would strengthen even more our liquidity position. Our net debt reached BRL 1.2 billion in September 2022, 1% lower compared to the previous quarter. In this period, our financial leverage measured by the net debt- to- EBITDA ratio in the last 12 months was stable at 0.67x, ending the quarter with a comfortable capital structure.
Well, now I'm going to once again invite Ricardo Carvalho to talk about our main ESG highlights. Thank you all, and we'll see you during the Q&A.
Thank you, Luciano. Now we're gonna talk about the main ESG highlights. Moving on to the first slide. We can see the environmental highlights. So we have three main points here. One is the issuance of the carbon credits through the REDD+ for the Cerrado Biome. The REDD+ is a program that encourages non-deforestation of regions that could be deforested legally. Like this, you generate carbon credits, and we were a pioneer in the Cerrado region.
That means we had to perform all of the technical development, scientific development, to be able to really generate the know-how in this Cerrado Biome, and then be able to apply the REDD+ in the Cerrado. It already existed for the Amazon, but not the Cerrado region. As pioneers, we opened the path so that other landlords can also have this option instead of deforesting and keep the forests alive and have these carbon credits. This is also another Brazilian initiative for the voluntary carbon market, which is an initiative that's coordinated by McKinsey to help structure the carbon credit voluntary market in Brazil. The third point we want to highlight also is our participation in the SDGs in Brazil from the global compact in the UN's headquarters in New York.
We wanted to really develop these strategies for sustainable development and SDGs. I participated in a full day of panels and debates with some discussions on climate change as well. I was also honored to be the spokesperson for the Global Compact in Brazil for SDG 17. Moving on to the next slide here. We also have some important highlights in the social and governance aspects, which are that we reached 16.7% of women in our total workforce in the company, and this evolution has been constant and consistent. In leadership, we have 21% representation.
We still keep up our main core areas of activity, which is support to the government, economic dynamism, and education and supporting government initiatives, and also highlighting an improvement in the level of health accidents in Piraju, Alumínio, and Niquelândia. When it comes to governance, we're able to capture about $96.5 million through bilateral operations considered to be sustainability-linked loans. We also received the Prêmio ECO Amcham Award as we deployed our boiler that's fed by biomass to substitute natural gas and diesel. We're also able to create the finance committee at CBA to be able to support the board.
This is set up by members that have proven know-how in this area. Well, moving on to the next slide, we have our main points and a quick summary of everything we've been talking about. Sorry, I lost the image, but here you have a summary of everything we've discussed so far. The financial performance is still quite healthy. We wanna highlight also the extension of the debt terms and improvement in the working capital. This cost management discipline really keeps us in the first quartile of cost in the industry. The margins of the smelters around the world are really more pressured and tight, as Luciano mentioned.
There's some uncertainties on global demand, but there's also a lot of uncertainties about the supply as we showed with the reductions that are already happening in China and in Europe. The market has a deficit of about 1.3 million ever since the second quarter of 2021 with stocks very low and levels very low. We continue to evolve positively in our growth plan, implementing some of the products that were promised during the IPO and also with new commitments and ESG initiatives strengthening our commitment as CBA in this front and our evolution in this front. I'll pass the floor back to Amábile Silva now so that we can begin our Q&A session.
Great. Thank you, Ricardo. Now we're going to begin the Q&A session.
Participants can send their questions by the Q&A icon or raise their hand to submit their questions by audio, or send their questions by the Q&A button. We have our first question that comes by audio, and it's from Daniel Sasson from Itaú BBA. Daniel, we will open up your mic.
Hi, guys. How's it going? Good morning. Thank you for this opportunity. It's always great to speak with you. My first question is gonna be about the net cost.
The CPV went up 15% in the third quarter compared to the second quarter, and I wanted to know if this necessarily means an increase in the CPV per ton in the fourth quarter, and if it's something we could mitigate, and if we could expect some reduction in the cost, the moving parts, inflation on one side and the other, and on the other hand. My second question is also about nickel. If you could clarify this and the overall impact in the EBITDA, specifically regarding the sale of the assets in São Miguel Paulista this quarter and what should be a sustainable EBITDA, recurring EBITDA for nickel in the next quarters. Thank you so much.
Thank you very much, Daniel .
Nickel, we started some initiatives to search for this, some alternatives. These numbers, if we have these initiatives and this work done, from next year, we probably won't have its cost anymore in our CPV. When we look at all the CPV, there's some things we can talk about here. Remember there's a moment from when we buy the raw material for the cost and the time in which it impacts our CPV. There's a few months, and we have caustic soda, natural gas, and then after they impact the final product. Most of our costs are related to the Brazilian inflation. When we look at these costs, they were growing this year.
Ever since the beginning of this year, we had caustic soda, natural gas, and they've all been on a growing trend. This is something that should still impact us up ahead due to this timing. I think that's an important initial remark. Then these costs that are valid for us and for industry, each one, especially for natural gas and caustic soda impact the production of alumina. Not necessarily all three produce alumina, but they're gonna impact all of them generally speaking. These are the main inputs. What we see is a bit of stability in most of these costs at higher levels. With petroleum coke, maybe there's some drops, but there's still a bit of uncertainty.
With caustic soda, we normally follow the IHS index, and that's where we have a possible perspective on continuity of growth. All of this is very uncertain, so it really depends. It's just a reference that we're presenting here. At this moment, it should remain as stable as, at least in the way we're buying the raw materials. We have also the energy costs, and this has already impacted 2022. You can see this in our numbers and some of the energy contracts. We have an important IGPM impact, and this has impacted some of the costs of energy, and the rest is basically IPCA.
This is probably gonna be a positive inflation, but lower than what we saw in the past.
Okay. Perfect, Luciano. Thank you so much. Just a quick follow-up. This is clear that CPV should be going up in the fourth quarter, with a higher cost being sold in the fourth quarter. Should we expect an increase of CPV in the fourth quarter? My question is more about the costs in the first quarter, beginning of next year. We're gonna grow, or when you think about some stability or a plateau, are we already considering this compared to the levels of the fourth quarter?
Well, for most of the costs, there's some stability at higher levels.
Maybe in electric energy, but we had some kind of a difference, and it's not about inflation or so. It's more about seasonality with our electric energy generation. It's normal that we would generate more, maybe a little less in the third quarter. The third quarter is normally when we least generate because it rains a little less in Brazil. In the fourth quarter, it really depends on the rain period. Sometimes it rains only in December, sometimes, as we saw this year, for example, rains came in way before. It really depends on the generation from our own production plants.
With natural trends, we would have an energy cost that's a little bit lower in the fourth quarter due to this fact, because we have more generation from our own hydropower plants, which have lower costs than the others. This is for 2022. Besides this, behavior in the energy, we also have the entry in January of the wind- power plants in the northeast. They come in and they also add on to our energy mix. Then you have energies with very attractive costs.
Thank you, Luciano. Very clear.
Well, thank you, Daniel, for the question.
We have one more question now, coming from Guilherme Rosito from Bank of America. Guilherme, please, you can proceed.
Thank you. Can you hear me? Yes. Thank you for taking my question.
My first question is to understand a bit more of how pricing were worked on this quarter. What was the mix effect? What was the contract lag effect? Also if you could give us an outlook on the demand for the fourth quarter in 2023. Beginning of 2023, you mentioned that the second quarter is normally a little stronger, and if there's any impact also due to the elections and if you're noticing anything related to the demand for aluminum in Brazil.
Well, I think the main effect that we saw was richer sales in this quarter, especially with the billets. This was a little different than what we had seen, and they were stronger now in the third quarter.
I also talked about this to mention that the second semester normally has more demand, and this is natural for it to happen. We also have another expectation that we would have a volume of greater value-added products and transformed goods in line that we normally see in this period. These are sales that in our vision are normalized. When you compare with the rest of the year, we would say that in the first and second quarter these sales were not normalized. We noticed that there was a stock of these metal billets. I think that this stock was consumed by about June this year.
This means that the sales were impacted less by market issues and more because there was an available stock in the market, especially in the production sources and those that were consuming the product through the third quarter, that we'll reach a normalized market. Then of course you have this more rich mix in line with this curve of sales of the VAPs and transformed products in line as what we had in the past. Of course the ingots that would be a commodity or like a buffer with an additional volume we sell of everything we do not sell as VAPs or transformed goods. This is our VAPs, right, which were the added value products. In Brazil we see the market's very resilient, stable.
Last year was a very good year. This year is still good. Now with this issue of this issue with the stock and the supply chain. This has been quite stable and so our expectation is that things will keep up in this level of normality.
Okay, wonderful. Thank you very much.
Thank you, Guilherme, for your question. Now our next question comes from Caio Greiner from BTG. Caio, you may proceed.
Hi there. Good morning, everyone. Thank you. Two questions. My first question is about the ramp-up of the Potline 3. I wanna understand how this is moving along, if you already have full capacity, and I wanna understand how you plan to use these volumes.
If the idea of the company with these additional 30 million additional of the run rate, or if we're gonna see an increment in sales in these volumes. If this is the second case, then how do you plan to this increment in the sales? Do we continue to focus on this substitution of imports? That we've already seen a bit more capacity coming in that will compete with you or if the idea is to really export. I'm asking you this because of this drop in sales that you had in 2021 versus 2022. If we look at the sales of transformed aluminum, primary aluminum.
You can also share this with us if you have any expectations toward results that would be incremental due to this startup of the Potline 3 . The second question, guys, is if you could share with us a bit more of your expectation toward the supply and demand of aluminum for 2023. If you could tell us about the expectation on the supply and demand in the world with China and without China. If you've ever reviewed these expectations and what you're working on when it comes to deficits and super profits. If you have any numbers, that would be great. But you can also give us more of a qualitative perspective only as well as if that's all you have.
Great. I can start answering that one. Yes, of course.
After, I'll leave the second part of the question to you. Caio, about Potline 3 , we practically already performed the ramp up. We're just working on some fine last touches, but we're almost in full production expected for Potline 3 . This is a project that it was very successful when it comes to anticipation timing and also the ramp up. It was also very successful. This additional amount of metal, all of our business case was based on the fact that we would be substituting imports. It does not represent a new market or big market share gain from customers, but an increase in the market share of the sources of supply for aluminum. We're substituting imports.
This is really the trend that we're seeing, and it's certainly what we expect and what we hope will happen when it comes to this issue with Potline 3 . Luciano, if you wanna get the second part of that question, just to add on, also another point is the sale of the billets here. The total volume of sales also depends on the amount of scraps we add to our mix. If we have the billet sales as expected, which is what we're looking at, we would have greater use of scraps because the billets use more scraps, and this, of course, contributes to the incremental sales.
If we don't have the billet sales, which is not our expectation, but if we have them as we had in the first and second quarter where the sales of the billets were lower, then you wouldn't have this increment in volumes that much. It's not just because the volume of this potline is not being sold, but because you're adding less scraps in the total mix at CBA. Whenever you look at the total volume of CBA for production and sales, you must consider the volume of scraps we add, and the sheets and billets are the products that most use scraps. This also contributes to our total sales volume at CBA.
Great. Luciano, maybe I can just take advantage of a follow-up on this question.
Once again, this year, maybe you'll reach this total volume of sales between transformed goods and primary goods about 370, which is our expectation versus 2021. That's closer to about 400. Could we expect 2023 to be closer to this 400, with the normalization of the stock and the supply chain and also adding on these volumes of billets that would be around 30,000 tons? Can we think of it in this way, or do you think this is too aggressive?
Well, Caio, yes, if we have a normalization. You could expect some level of normalization as was done in 2021, plus an addition of Potline 3 , where you have a normalized market.
What I wanna say with this is that, especially in the civil construction segment and the sale of billets, that's where I think would be the most important. Sheets and billets are really the main points where you have an impact. What I'm trying to say is the additional volume of scraps that we add to the CBA mix, transform into the aluminum sale. If I sell more of these products, I add more scraps and I add more volume into this mix. The potlines are always gonna be operating with their full capacity and would never change. What changes is in the volume of production, the CBA, which is the amount of scraps we add, and this can be transformed to more or less products.
You're correct in considering that we should have more normalized volumes in the segments we work with the addition of those 30,000 tons that come from the Potline 3 . Besides this, we also have a startup of the recycling line at Metalex. If we're successful with this, capturing more scraps that we can process this at the Metalex line, we'll also have an additional volume of scraps and other scrap products that are commercialized and traded. When we talk about the supply and demand, it's an excellent question. We don't have the perfect answer for it, but what we talked about is if we monitor some of what the analysts and banks and the CRU specialists are presenting, there's a bit of a divergence.
Some are forecasting a surplus for next year, some are forecasting a deficit still for next year. However, for both cases, the surplus is not relevant and the deficit is also not relevant. You can see the market where whether it's a forecast of a surplus for 2023 and a deficit, they're both marginal. If we wanna think about this from a more qualitative perspective, I think that would be a good way to think about the year of 2023. It's a market that's pretty much balanced out, which is healthy for the industry. Having a market that's more balanced out with prices that should be reflecting the fundamentals of the industry and also have them more in line with what would be the average cost of this marginal product.
This is a bit of our vision towards this and what we're looking at in the market. In practical terms, what's been going on in the last few months is that you have prices that are below what would be the average in the market, which is not normal or usual, but it is what's happening for a few months, especially with a major uncertainty in regards to China. One of the main uncertainties now is China, right? When we have the issue that I mentioned with a possible change in the offering there in China specifically now in winter, but it's also the most important point is demand.
There's an expectation with what the market's looking at with a cool down in the demand due to this crisis in the civil construction cycle and the lockdowns in China. If this does not become a reality, it could be positive news, but there's still major uncertainty in this perspective on the reality in China. Okay.
Wonderful, guys. Thank you so much.
Thank you, Caio. Now we have one more question from Thiago Lofiego from Bradesco BBI. Thiago, you may proceed.
Well, good morning, everyone. Can you hear me? Yes, we can hear you, Thiago. Two questions. The first one is about the cost of energy. Could you maybe talk about the benefits and the costs with these new assets for renewable energy starting by next year? That's the first question.
The second question is if you could cover a little more on Metalex. Can you quantify the estimate for gains of the bigger use of scraps with the Metalex project? If you could help us with this, that would be great.
Well, Thiago, about Metalex, we don't have the visibility yet. We don't have a complete number to show you, but we'll find a way to try to share more information on this project to you in the next disclosures and releases. But about cost of energy, another important point is just talk about the current quarter. The relevant impact of IGPM index in some consortiums. When we talk about these consortiums, the IGPM impact, this considering the purchase of this energy impacted by the inflation.
When we are part of the consortium, we also receive back this additional cost if the consortium had this profit as a dividend. You're gonna see this through dividends in subsequent months in our cash flow. There's a bit of a mismatch between the cost impacted and also having some sort of a benefit coming back from this in the cash flow. Just to give you a little more visibility on this point. About the wind- power plant, from January onwards, what we can see here is a partnership that we have. In this partnership, we buy energy through a PPA, and we have a benefit of this energy also through dividends. It's a mechanism that's very similar to the one I mentioned with the consortiums.
If you wanted to estimate this, I would imagine something as market prices, considering the long-term perspectives, for the energy in Brazil. That's the price we're gonna have to buy this energy and have this entering our mix. So it'll impact the cost. But this asset with profitability, futurally, I'll be able to receive back part of this amount that was paid on this energy through dividends and this participation we have there.
Okay. That's clear, Luciano. Thank you so much.
Thank you, Thiago, for that question. We have another question coming from Guilherme from XP. Guilherme, you may proceed. Guilherme, we can't hear you. I don't know if you're on mute. I think he hasn't joined yet. Can you please enable Guilherme's audio?
While we wait for Guilherme's audio, we have another question also from Leonardo Correa from BTG Pactual. Leonardo, you may proceed.
Hi, guys. I think they finally opened up my audio here. This is Guilherme.
Okay. No problem. You may proceed, Guilherme.
So, thank you, everyone. Amábile, Luciano, Ricardo. Thank you for taking my question. I have two, actually. The first one is a follow-up. In regards to the demand, we had a range of 5%-15% of the volumes that you sell being exported, and I wanted to understand how this evolved in the last quarter and how you expect demand to be in the international market with this volume of exports. The second question is about capital allocation. Have you been discussing internally any modification in the dividend policy?
We know that normally you review this policy annually, and there should be some revision in April 2023. I wanted to understand a bit more about this when you consider the low leverage of the company and what we could expect when it comes to capital allocation.
Thank you, Guilherme. Thank you for the questions. Now about exports. It's great that you asked me about that because we disclose this information in the material. We always say that there's pretty much an average of 10% of our sales volumes that are exported recurrently in a recurring manner and stable manner with finished goods, especially the sheets and transformed goods. This is our main channel for exports considering very stable exports.
If you take a look at our number, maybe this export has been a little bigger than this, maybe 13% in the first quarter, maybe dropped to 11% and 12% in the second quarter. Now it's a little below 10% in the third quarter. It's been dropping. What's dropping from this export? These exports are the additional volumes of opportunity-based exports, right? Exports that where we perform especially the purchase of billets because the Brazilian market wasn't demanding this so much that we're exporting. These are the volumes that are basically reduced. We have currently that volume I mentioned that's more stable for the sheets in the U.S. It's a little bit below 10%, but it's not because we reduced exports, but because we are adding volumes of recycled goods.
You can see our volumes are going up because the incorporation of Alux in our volumes. We have more volumes of sales in the internal market due to this. That means that if you keep that stable level of exports, it'll drop. If I had to give you an idea about this, I would say it's probably about 10% of the exported volume, and that's recurring. That's what's always gonna happen. We prioritize the local market. The Brazilian market is always our priority, and we search for exports, especially with volumes of products that have more added value, where we can capture higher premiums. When it comes to capital allocation, Guilherme, we don't have a definition, as you saw. Yes, we do perform an annual revision after the first quarter normally.
We have a cash position and leverage position that are very comfortable. Remember that we have an amount of CapEx this year and in the next years that's very relevant with all the projects we've already disclosed to you. It's going to be an analysis that's gonna really depend on the moment we're experiencing, the price of the aluminum, our cash generation, and how we're doing at that moment. Up until then, we've been progressing with all of the projects at the same timelines we had disclosed ever since the IPO. Nothing changed in this sense. The financial schedule and plan is following according to what we have as cash generation. There's no changes expected for this moment. I'm not saying we're not gonna have changes, but it's something that's still gonna be discussed.
Always, you need to remember that we have an amount of CapEx that's very important and, for us, this is a priority. The minimum, of course, that we have to pay. Of course, this will also depend a lot on the equations of how what I see as future CapEx and what I see also about cash generation and, at present, based on what the market is, expecting.
Okay. Thank you very much.
Thank you, Guilherme. Sorry for the delay in opening up your mic, but now we'll move on to Leonardo Correa's question. Leonardo Correa, you may proceed.
Hi, guys. Good morning, everyone. Well, good morning. One question here, on my side. We've seen that weekly, we can have some capacity adjustments in the aluminum industry.
Prices at these levels, nothing will make too much sense in the global industry, so a lot of people are kind of under the water. Of course, the cost situation abroad is very different than the reality in Brazil. My question is basically if you have any kind of contingency plans, if prices are left at these restrained limits for many more months, is there any plan for shutting down capacity or some streamlining in the capacity? Just wanna understand a bit of what could happen in this scenario where prices are lower at these levels that don't make too much sense structurally, but what would be the company's response in this scenario?
Leo, just a quick comment here, and then you can also contribute, Luciano.
As we have our production in the first quartile, we have some resilience and a robustness for moments that are more difficult. The possibility that cutting down our production is not something that we're imagining, reducing this production despite the more adverse scenario. Something we were expecting that would happen in more adverse scenarios. Now, what we need to do is really manage the costs in a more disciplined way, stricter way, with more austerity adapted to a more tight scenario, which is like business as usual when it comes to commodities and when you're in a moment of a boom or a slowdown.
What we normally do, which is a recurring exercise for us, is that we always assess our main costs, our main expenses, and the ways we can mitigate results that are not as good as we would like them to be. Of course, this is more of a hypothesis where we have maybe like a worsening of costs and then the difference in the cost curve would increase even more. To start off by answering your question, we don't have this perspective of reducing production, but we always wanna really keep a very strict discipline on costs, capital allocation, and management so that we can go through moments that are a little less attractive when it comes to results in a very comfortable way and healthy way.
So just to add on, our expectation, especially based on what we've always seen historically, is that we're less impacted by the average in the industry. If there's any kind of change in the production and capacity, it's probably gonna happen a lot in certain regions due to the competitive advantages we have towards costs. Eventually we could even be doing this. In CapEx, there's something interesting that we should look at as well, which is we have CapEx that's very modular. We have many small projects that we can also adjust and adapt to. We would follow the same schedule that we had foreseen in the IPO.
When it comes to more modular CapEx, we would also have some more flexibility, maybe, with delaying one thing or another if necessary for the CapEx. That's not what we're doing. It's just a possibility for a possible eventual scenario, but it's not a general assumption at the moment. As Ricardo mentioned.
Okay, thank you very much, guys.
Thank you, Leonardo. Well, since we do not have more questions at the moment, we are moving towards the end of our presentation. It's worth saying that any additional questions can be submitted to the IR department, which will be available to support you. Now, we'll see you in our next earnings call for the fourth quarter of 2022, and I'll pass the floor on to Ricardo Carvalho as he performs his final remarks.
Thank you so much for everyone's participation. Ricardo, please. Thank you, Amábile. Thank you everyone for participating today. As always, we're always open to answer any other questions or remarks. As a final message, I just wanna highlight that our financial economic performance is still very healthy, with cost management keeping us in this first quartile with some global uncertainties in the demand, but of course, with many uncertainties with the supply as well regarding closings in China and Europe. Now we've had consistent evolution in our investment plans and new commitments and ESG awards as well that are really reinforcing our positioning and stance in the overall industry. Thank you so much once again for your participation, and we hope to see you in our next earnings call. Thank you very much.