Welcome everyone here in Oslo, and welcome also to all of you following us on webcast. We are here to present the second quarter results for 2019. They will be presented by our CEO, Hilde Aasheim, and CFO, Eivind Kallevik. Afterwards, we will have time, as usual, for questions from here in the audience or from webcast, and also one-on-ones afterwards. With that, I'll give the floor to you, Hilde.
Thank you, Inger. Good morning to the ones here in Oslo. It is good to see so many. Good morning to the ones following us on webcast. It is indeed a volatile business environment these days, very much driven by the trade tensions and the insecurity that follows from that. Hydro's business is a global business, and we will see that the second quarter results are impacted by weaker macro results. On a positive note, I am very happy that we got the embargo lifted on production assets in Brazil. I am also very happy to see that the startup has gone very well so far, both in Alunorte, Paragominas, and Albras, and I will refer to that in a few minutes. Let me turn to the highlights for the quarter.
Underlying EBIT of NOK 875 million, which is substantially down from Q2 last year, which was at a level of NOK 2.7 billion. Slightly up from the first quarter, with a result of NOK 559 million. As I said, ramp-up is progressing successfully at Alunorte, Paragominas, and Albras, and in a few minutes, I will talk about the ramp-up schedule in Alunorte. Obviously, when we have more volumes out of the Brazilian asset, we see that also now influence in the results and in the Bauxite & Alumina results. We are up on increased production, but mostly offset by lower realized alumina prices. Primary Metal is down on realized aluminum prices compared to Q2 last year. We had more than NOK 2,500 in all-in prices, while we had below NOK 2,200 in Q2 this year.
We were hardly hit by the cyber attack in March, and still we see financial impact of the cyber attack, estimated to NOK 250 million-NOK 300 million in Q2, slightly higher than what we guided on in Q1, NOK 50 million, and mainly impacted in Extruded Solutions. We see now that the downstream results, both in Extruded Solutions as well as in Rolled Products, influenced now by lower margin and volumes influenced by the cyber attack, but now reflecting more softening demand. We have an energy result, which is lower than Q1 based on lower volumes and lower prices. We had an extraordinary high result in Q1, now down in Q2, simply because we are producing less volume and the prices are lower.
When it comes to the global supply-demand balance, we expect a deficit of around one to 1.5 million tons, more or less in the same level as we said after Q1. What we have done is that we have revisited our demand growth expectations, coming down from 1%- 3% to 1%- 2% for the full year. Let me turn to the ramp-up in Brazil and particularly Alunorte. To ramp up a huge refinery like Alunorte is a big task. The fact that we have been operating all the seven production line in a rotation system, we were in a position that we could start up from day one simply because we had the equipment intact and we had the organization intact. The ramp-up actually started May the 21st. To the left on this chart, you see the ramp-up schedule week by week.
You see here that we have been ramping up first towards an annualized level of 4 million. After some few weeks, we lifted the ramp-up further, simply because we saw how the press filter technology was working. Here, I would like just to again remind the audience that we are installing a new technology, a new press filter technology. When the embargoes happened in February last year, we were in a commissioning situation. The embargo came in, and we had to stop. Now we are still in a commissioning phase of the press filter, testing out the new technology and now how it works as we are ramping up to full capacity. That is also why you see that week on week, there are big variations. We can have a good week.
We realize we get some experience, we have to fix that, we come back again and improving on a more stable level. Now the last four weeks, we have been operating in the range of 75%-80%. Actually, the last four weeks, we have been able to operate at 80% in a stable way. I want the audience to understand that this is not a straight curve. It's about learning how to operate the press filters, how to optimize in terms of maintenance schedule, how to optimize on the cycle time. We stress that we are still in a learning phase. To the right, I show the way forward for Alunorte. We believe that we will be able to stabilize at a level between 75%-80% during the rest of the year. We have invested in a ninth press filter.
What we are working on now is eight. We foresee that the ninth press filter will be in full operation in November, December. That will add 10% capacity to the press filters. Then we're talking about a range of 85%-90% compared to full capacity. Again, I stress that further process optimization will continue to reduce downtime, to learn how to use the new press filter, and to be able to deposit the red mud in a much drier state than what we had in the past. That is sort of the insight into the specific ramp-up week on week since we have started the ramp-up on 21st of May. Paragominas is ramping up in line with the ramp-up speed in Alunorte. I am also happy to say that we have had a good start in Albras.
We are at the 50% level now, started 50% of the cells, and we believe that we will have started all the cells at the end of Q3 this year. Going forward, related to Brazil, it's obviously about a safe ramp-up of Alunorte, Albras, and Paragominas. That is our key priority, getting more stability, producing in a good way, and to really show the capability of these assets. We are fully committed to deliver on the obligations under the technical and social agreement. That is important that we deliver what we say we will deliver, and that is also about building a good, let's say, being a good citizen in the local community. We have talked a lot in this audience about the red mud deposits, the DRS1 and DRS2.
As you know, we got the embargo lifted on the production asset, we're still waiting to have the embargo lifted on using the new deposit, the DRS2. We're working now together with SEMAS and with Ministério Público in the same way as we did towards lifting the embargo on the production asset, trying to get a common platform that we together can go and file a petition towards the judge, because it's a judge that can lift the embargo on DRS2. We have a good dialogue, we have a good process, I know that you are waiting for the timeline, and that we cannot tell at this point. While we are waiting for the embargo to be lifted on DRS2, we are using the DRS1. We believe that the lifetime of DRS1 is one year, we have geotechnical assessments that is undertaken now.
We need a couple of more months to get more insight into if we can extend the use of the DRS1 longer than one year. Having said that, the only long-term solution for Alunorte is to use the new DRS2 together with the press filters. That's the long-term solution, and that's what we're working towards, and then to be able to close the DRS1 in a good way. To the cyberattack. As I said, we have estimated the financial impact of the cyberattack in Q2, roughly NOK 250 million-NOK 300 million, NOK 50 million higher than what we guided on. Most of the effect is within Extruded Solutions. Overall financial effect of Q1, we have reported earlier, NOK 300 million-NOK 350 million, of which Extruded Solutions again was hit the hardest with NOK 250 million-NOK 300 million.
What I am happy about is that we see now the end of the effects of the cyberattack. We have now normal production, normal activity in all business units, including Extruded Solutions, even though there are still some manual work and some workarounds. Overall, we are back to normal. The cost that we talk about is loss of business continuity, and it is the cost of recovery. We believe that we will have a limited financial effect going into Q3, and we confirm, as we have done in the previous quarter, that we have a robust cyber insurance with recognized insurers, but we have not accounted for any receipts from this insurance at this point. Let me then move to the global aluminum market and the global supply-demand balance.
Let me start by Q2, where we saw a 0.8x demand growth in Q2 this year compared to last year, 1.5% in China, and almost a flat development in world ex-China. On the supply side, we saw an increase of 1%, more or less all coming in world ex-China. If you combine these numbers, we end up with a deficit in the Q2 of roughly 1 million tons, which is a normal seasonal development in terms of the balance. If you look at the 12 months rolling average, we believe that we see a deficit of 1.3 million tons at the end of the second quarter. As I said in this to start with, when we talk about the global supply-demand balance for 2019, we have revised our growth target from 1%-3% to 1%-2%.
There are some downside risk related to these numbers. Coming to the global supply-demand balance for 2019. We normally break that up in world ex China and then China. If we look at world ex China, we have taken down our demand growth from 0%-2% to 0%-1%. We see a weaker sentiment, particularly in Europe. We see auto production is down, and we also see the insecurity in Germany in terms of the import tariffs discussions towards U.S., and we also see lower demand from China. We also see that in North America, we see that more scrap is available, so the primary metal demand is lower. When it comes to the supply growth, we stick to the same numbers as we had in Q1, 2%-3%. We know about Alba. We know about the restarts in the U.S.
We have heard now about Becancour, and we know about Albras. Albras will not change the number so much because we were out last year as well as first half this year. When it comes to China, we are taking down our demand estimates from 2%-4% to 1%-3%, simply because that we see that demand numbers are lower, and we're also taking down our supply estimates from 1%-3% to 1%-2%. We see that there are slower ramp-up of new capacity, and we see that the government's supply restrictions relating to quota for new capacity is in force.
Putting together these numbers, we see China that is more or less in balance, still a deficit in the Western world or world ex China, which ends up with a deficit of 1 million to 1.5 million tons, more to the 1 million than to the 1.5 million. The deficit that we have seen in the global supply-demand picture in 2017 and 2018 has been filled from the inventories. We've seen that inventories have gradually trending downwards. I show here to the left the global reported and unreported numbers. We are approaching a level of 11 million tons and an inventory days of 60. We see that the inventory days number is approaching pre-financial crisis of the 50s, which we considered at that time to be a tight market.
I have to take a cautionary note when we look at these numbers, because the unreported is not a physical number, it's estimates, and so there are insecurity about these numbers, but the trend is quite clear. To the right, I show the exports of semis out of China, which is very important to understand the aluminum industry. We've seen that export has increased year-on-year from China. We saw a growth of 7% of export from China compared to second quarter last year. Quite a lot of export in April. High export in April and May, but then the export went down 6% compared to May in June. We see now that the arbitrage, the difference between the Shanghai price and LME is shrinking, meaning that the incentives to export should be lower. China is important to follow in terms of the aluminum industry.
It's very decisive for the whole sentiment for aluminum. Right now we are focusing on the demand in China, which also has a bearing on how we look at exports going forward. If you look at the LME development, we've seen a drop from roughly the average of NOK 1,881 in second quarter to NOK 1,818 as an average in Q2. A 3% drop. To the left here on the chart, you will also see the increase in the Shanghai price, which I've just commented on, which shrinks the arbitrage and the incentives for exporting out of China. In the second quarter, we have seen prices starting from around NOK 1,900 to below NOK 1,800. Quite a volatile price development. The average has been more or less on the NOK 1,800. To the right, we see the regional standard ingot prices.
On the Midwest premium, we saw a huge peak when the import tariffs was introduced in the beginning of last year. We have seen that the ingot prices in the U.S. has trended somewhat down, little bit also down now in the second quarter, simply because of Canada being exempted from the 232. In terms of the standard ingot prices in Europe, they have been trending slightly up, but more or less on the same levels as we have seen in the last quarters. Alumina prices is also down in Q2, trending downwards throughout the whole first half of 2019 and also into Q3. We are now seeing alumina prices below $300 in July. Continued price volatility. We saw a spike in May, simply because there was some environmental curtailments in China, but then obviously when the announcement of lifting the embargo in Alunorte, we also saw prices coming down.
The refinery cost in general for the alumina refineries are trending downwards on lower caustic soda. We see that some of the Chinese domestic bauxite, or some of the domestic alumina refineries having a local bauxite source is impacting the Chinese competitiveness. China is moving now from being an exporter. In 2018, which was quite an extraordinary situation, incentivized obviously by the high prices. China has turned into importing limited volumes of alumina, and we will follow that going forward. To the softening downstream demand, going more into our markets. If we look at extrusion to start with, we see weakening demands in North America. When I showed this picture for Q1, we talked about a growth rate of roughly 2.5% in North America. We're looking at more than 1%. In Europe, we talked about in Q1, a growth rate of 1%. We talk about 0.5%.
A couple of comments to two segments. The building construction industry in North America or in the U.S. has been very strong over the last years. Now we see a flat development, a growth rate of zero in Q2 compared to Q2 last year. Meaning that we see weaker demand in this segment and in particular in the residential area. In Europe, we see weakening demands in transport and automotive, very much the same comment that I gave to the global supply demand and the demand in Europe. Germany is seeing reduced car production and the insecurity reflected in the discussion about import tariffs towards U.S., as well as the demand outlook for China, where Germany is, of course, a big producer towards the high-end, the costly cars.
In terms of Rolled Products, there we see more or less the same growth rates as we talked about in Q1. There are a couple of also important areas to follow. It is obviously about transport and automotive with some of the same comments that I had on Extrusion. Here we see a higher growth rate still because of the substitution effect towards using more aluminum in cars. Then we see some interesting growth rate in packaging, particularly in Europe. The packaging segment in Europe represents 50%, or the can market represents 50% of the packaging segment. Here we see a 5% growth rate towards last year. That is not only because people drink more beers in difficult times, but it is more this also the substitution effect towards bottles. So we see that cans are getting more into new and more and more applications.
The same effect we see actually in the U.S. Here also cans are important, or 75% of the packaging market is about cans. Here we see still a good growth of 1.3% in the North American market. There are spots where we see weaker market sentiment, but still overall growth in the two segments. Raw material cost is important, which influence our numbers. The top line is about raw material cost for the Primary Metal part, and then on the lower line, it's about raw materials for the alumina. We saw big increases in carbon cost in 2017, 2018. We see that that's come down, and we see that relates both to petroleum coke and pitch. We see that that is coming down and are also at the level with the green dot is the spot market today.
On the alumina, we see alumina prices coming down. We expect that we also to see that into third quarter. On the alumina refinery side, caustic soda has come down from high levels and more stabilized now. Fuel oil has also come somewhat down. Also steam coal substantially down and are more or less at a level in the spot market today. Here I would like to stress that when we see these numbers, we have to take into account that we see a lag of at least a quarter before this comes into our numbers. I should also mention that these are commodity raw materials that will also influence the whole industry. Our costs are coming down. To the left, we see the cost development in alumina, and to the right, we see the cost development in primary.
If I take alumina first, we see that cost has come down in Q2 compared to Q1. That is primarily related to caustic soda, but it's also related to the fact that we now have higher production than we had in Q1. Costs are substantially lower than Q2 last year, simply because at that point, we had to source expensive alumina to be able to keep production going towards Bauxite & Alumina's customers. When it comes to primary, we see that cost has come down from Q1 to Q2, primarily related to alumina. Here, we expect some more to come also in the third quarter. Somewhat lower also in carbon.
We see that the margins, compared to Q2 last year, is way below what we achieved in Q2, simply because, as I said to start with, we had much higher all-in prices in Q2 last year than we have had this quarter. I would like to make some comments to Rolled Products. A weak result in Rolled Products, and we also see a sales reduction driven by softening markets. We have talked about this before. Second half versus second half last year is down 2%, primarily in the foil and litho business. We see the same picture for Q2 versus Q2 last year, primarily litho and foil. As you know, in terms of the foil business, we have already started on restructuring that business.
We have taken down one line already, and we, in the strategic review that are well underway now, we are looking into more in order to improve this situation. There's a fierce competition from China. We have a not good enough performance, and we see that sales are coming down. In Q2 versus Q1, we also see the weakening of the automotive market, where we see that we have lower volumes in the automotive market than we had Q1 last year. Not a good situation in Rolled Products. That is why we have addressed it in our strategic review, and I will come back to more details about that when we meet, hopefully, on the Investor Day on the September 24th, 2019. On Extruded Solutions, on the opposite, I'm very happy to see how Extruded Solutions is working year-on-year according to their value over volume strategy.
We see here on the slide the net added value per kilo improving year-on-year in each of the business units. I'm very happy to see how Extruded Solutions are able to work in the local market to come forward with new solutions to new products in order to achieve value creation after the crisis. Here I would like to give credit to Egil and his team in Extruded Solutions. If you exclude the cyberattack effect in Extruded Solutions, Extruded Solutions have a good quarter in second quarter as they had last quarter. That's a real positive part of our Q2. I would also like to give an example of how Extruded Solutions are continuously reviewing the overall portfolio.
We have more than 100 assets and extruders within Extruded Solutions. The management of Extruded Solutions are continuously reviewing to see how we can optimize and streamline and make the portfolio even more robust. Now taking into account the softening demand in several markets. We have already announced several restructuring efforts. In the U.K., we closed down a U.K. fabrication and automotive site in the U.K., transfer business to other plants in the U.K. We are closing a building system warehouse, transferring business to other warehouses in the U.K. We have announced the closure of a Spanish extrusion plant simply to optimize the Iberian area. This has a positive business case. This will add to the target that we have in Extruded Solutions to improve the EBIT by 10% every year.
This is an important part of this continuous effort to improve their business of the Extruded Solutions portfolio. We have included some restructuring costs and an impairment of NOK 28 million booked in as items excluded, and I guess Eivind will comment on that in his presentation. Some few words about the energy market. We have seen lower prices both in the Nordic segment as well as in the Continental. In the Nordic, we've seen improved hydrological balance, which is snow and water. In the Continental, we see lower fuel and coal prices. When it comes to the hydrological balance in the Nordic area, we now see a balance which is one terawatt lower than normal. We saw in Q2 last year, we had 15 TWh lower than normal. In Q1 this year, we had roughly seven.
The hydrological balance is better, which is influencing the prices in the Nordic area, together with also more wind coming into the market. That is also the reason why we see the results in energy, which was very high in Q1 based on higher production and higher prices, while we now have lower volumes and lower prices. I talked a lot about now a weaker sentiment and weaker demand in some of our product segments.
I would like to end my presentation on a positive note in the sense of showing an example of a product area that has traction in the market, which is the brand that we launched a few years ago on the Capital Markets Day, this 75R, which we now call CIRCAL 75R. The picture I have behind me here is a picture from the Økern Portal, which is the largest development area in Norway these days, where they have been looking at materials relating to sustainability. Our product, the CIRCAL 75R, can actually meet the building and construction company's search for material that have a low carbon footprint. We see more and more interest from this material from building and construction customers.
We are very happy as Hydro to be the only company that can provide this material based on end-of-life post-consumer scrap that is produced in Primary Metal, that is promoted and sold in Extruded Solutions through the building system brand WICONA, which is the system supplier to the builders and to the architects. This is a product that we can trace and that we have a certificate that is certified by a third party, that is certified by the DNV GL. We believe that this will be an important part of our differentiating us from the rest of the industry by coming forward with low carbon footprint brands. We see that the European Commission have set out a target of requiring that all new buildings within 2030 should have a net zero carbon emission footprint, and all buildings by 2050.
We believe that an example like CIRCAL 75R can enable builders and architects to meet demanding sustainability targets. This is an exciting journey which is about our agenda, lifting profitability, driving sustainability in order to differentiate ourselves from the rest of the industry. Before I close my remarks, I would then like to give the word to Eivind to go more into the details of the actual numbers for Q2.
Thank you, Hilde. Good morning from me as well, and I will take you through the financial results for the quarter. If we start with the high-level results development for the quarter. In the second quarter, we delivered an underlying EBIT of NOK 0.9 billion, which is significantly down from the NOK 2.7 billion we delivered in the same quarter last year. Most of the reduction in the results is explained by a decline both in the realized aluminum price as well as a decline in the realized alumina price. 14% lower aluminum prices measured in dollars took the results down by some $1.4 billion. We saw a 15% effect in particular within Extruded Solutions. This had a negative effect of NOK 0.3 billion. The stronger dollar against all our major cost currencies support our earnings with NOK 500 million in this period.
Finally, a significantly lower power production in energy, as well as a combination of several factors, including loss on excess power sales in Albras, cyber attack effects on corporate costs offset the positive effects we had on ramp-up in Alunorte and Paragominas, and netted out to a negative NOK 0.2 billion. If we compare the results to the previous quarter, the results improved by NOK 0.3 billion from NOK 0.6 billion in Q1 up to NOK 0.9 billion now in the second quarter. The upstream results improved largely driven by relief in the raw material costs and some reduction in fixed costs all together with an effect of NOK 0.5 billion. The further reduction in alumina cost for Primary Metal alone amounted to NOK 0.3 billion, while carbon, bauxite, and caustic costs in B&A amounted for the remaining NOK 0.2 billion.
The ongoing ramp-up in Alunorte and Paragominas, following the lifting of the embargo in May, has been progressing well and contributed positively to the result. The higher upstream volumes, in particular from Alunorte, lifted the volumes with roughly NOK 0.2 billion in this period. These positive developments were offset by a 3% decline in realized alumina prices and a 2% decline in alumina prices, taking results down by roughly NOK 0.2 billion. Results in energy down by NOK 0.3 billion, primarily driven by significantly lower production this quarter, as Hilde has mentioned. Finally, seasonally improved results in Extruded Solutions. Strong results from the remelters, which was partly offset by the weak performance we've seen in Rolled Products, added roughly NOK 0.2 billion to the results, leaving us at NOK 0.9 billion for the quarter.
If you take a quick look at the key financials, revenues are down roughly NOK 2 billion compared to the second quarter of 2018. This is driven by declining prices, partly offset by the positive currency developments. We also see a reduction in volumes in all business areas, with the exception of B&A, where we see the positive impact from the lifting of the embargo and the start of the ramp-up. This quarter, we have excluded from a reported EBIT of NOK 656 million, a loss of NOK 219 million as items excluded, which I will get back to on my next slide. With that, we end up with an underlying EBIT of NOK 875 million. Interest rate expenses, which has gone up now subsequent to the bond issue we did some months back. The remaining part is mainly an unrealized foreign exchange loss of roughly NOK 450 million.
This reflects the weaker forward rates, NOK versus EUR, having an impact on the embedded derivatives in the euro-denominated power contracts we carry for our Norwegian portfolio. As a result, the income before tax in Q2 is marginal at NOK 8 million negative, significantly down from the NOK 2.5 billion we saw in the same quarter last year. We have income taxes of NOK 183 million.
This, of course, reflects then the power surtax we pay on our energy results in this period. Gives us a negative net income of NOK -190 million, again, down from positive NOK 2.1 billion last year. Online net income, positive NOK 281 million. Consequently, the underlying EBIT is then also down to NOK 0.19 per share. If we look at the items excluded, we did exclude a loss of NOK 219 million from the reported EBIT this quarter. As usual, we do exclude the normal timing effects.
This quarter it netted out to roughly NOK 58 million. In addition, this quarter we have several one-time effects. The biggest one being the impairment and rationalization charges within Extruded Solutions amounted to NOK 228 million. NOK 200 million in restructuring charges, NOK 28 million as an impairment, given the restructuring program we are currently running in Extruded Solutions. We also made a small change in the TOC and TC arrangements, adding another NOK 14 million. We also have NOK 35 million in transaction effects related to the acquisition of the outstanding 50% of the shares in Technal Middle East this quarter. We move into the individual business areas, starting with B&A. The underlying EBIT for the business area improved from NOK 364 million in Q2 2018 to NOK 415 million this quarter.
These improvements reflect the ongoing ramp-up of both Alunorte and Paragominas, has so far also been progressing faster than what we had expected. The higher alumina production lifted the results with roughly NOK 200 million. We also see positive effects from scale effects on fixed costs, reducing that with roughly NOK 3 per ton already in second quarter. At the same time, we have also higher bauxite volumes, as well as lower production cost in Paragominas, lifting the results with another NOK 120 million. On the currency side, we see a 9% weaker BRL versus the U.S. dollar. This has a positive impact on the BRL-denominated cost, amounting to roughly NOK 150 million in this period. On the other hand, we saw a 15% decline in realized alumina prices, taking down the result with NOK 400 million between the quarters.
If we look into the next quarter, we will continue to ramp up Alunorte as well as Paragominas at the same speed. This will both have a positive effect both on volume, but certainly also on cost per ton. As Hilde has explained before, we do expect to run in the range of 75%-85% on the nameplate capacity with eight press filters. We will commission the ninth press filter in September or October, which would then take us up to the range of 85%-95% during 2020. Fixed cost, if you look at them in absolute terms, they will be higher when we go into Q3. When you look at those in USD per ton produced, we will see a continued improvement in Q3.
Please remember that roughly 15%-20% of the cost in Alunorte is deemed as fixed, and 65%-70% of the cost in Paragominas is deemed fixed. We do also expect to see some raw material cost relief in the third quarter, in particular when it comes to caustic soda. We turn to Primary Metal, where we did see a of 2019. By far the largest result explanation here is the 14% reduction we've seen on realized metal price, taking the results down by roughly NOK 1.3 billion. In addition to this, we also had a loss on the sale of excess power in Albras, amounting to roughly NOK 200 million for the second quarter. We also see on production and sales volumes, which are lower, also gives a negative effect of roughly NOK 200 million.
The raw material costs between those two periods have been relatively stable. We did see a stronger dollar versus our major cost currencies, having a positive impact of roughly NOK 300 million. If we look into the next quarter, we are making progress on the Alunorte ramp-up. We have started roughly 50% of the curtailed cells in the middle of July. We expect all cells to be restarted at the end of Q3. As such, we expect to see higher production volumes in that quarter as such. Also important to mention that as we are ramping up production, we will have less excess power to sell in Brazil in Q3, we shouldn't see any significant impact on excess power sales in that quarter.
On the price side, we have sold roughly 55% of Q3 production forward at $1,785 per ton, indicating that the average realized price for Q3 will be somewhat lower than what we saw in the second quarter. On the premium side, we've also booked roughly 55% at $350 per ton, meaning that we have a higher proportion of standard ingot sales which haven't been booked, indicating that the price range or the premium range should be to the tune of $300-$325, somewhat lower than what we saw in the second quarter. On the cost relief side, we do continue to see raw material cost prices coming down.
We do expect that the alumina price alone should give us a relief of roughly NOK 200 million-NOK 250 million for the second quarter, and then that carbon and energy is going to give us an additional NOK 200 million in cost relief for the third quarter. We turn to Metal Markets. They delivered an online EBIT of two performance-wise from the remelters, driven by high margins both in the European market but also in the U.S. market. In addition to this, we also saw strong contribution from the sourcing and trading activities within Metal Markets. If we exclude the NOK 52 million from the negative currency and inventory valuation effect, the result was NOK 352 million, up from NOK 224 million in the same quarter last year. Significantly higher than NOK 125 million or NOK 500 million on an annual basis that we are guiding on.
We continue to see good market conditions for the remelters. There is still good availability of scrap. We expect another quarter with strong performance from the remelters, both in the European market as well as in the U.S. market. As always, do remember that the trading results and currency and valuation effects in Metal Markets are volatile and can change these numbers pretty quickly. Looking at Rolled. Rolled delivered a weak result of NOK 75 million in the second quarter of 2019, which is significantly down from the NOK 212 million we saw last year. The results from the rolling mill operations declined mainly due to unfavorable product mix in this period, but also due to lower volumes giving a softer market sentiment, in particular within the foil and lithographic sheet market.
In addition, we continue to see labor inflation, so also personal cost is up this quarter compared to the same quarter last year. When it comes to the smelter, the results declined primarily due to the lower all-in realized aluminum prices between Q2 last year and Q2 this year. If we look into Q3, we are seeing again somewhat softening growth rates in some of our markets, in addition to continued margin pressure within some of our key product areas. Not surprising, this potentially will then continue to have a negative impact on the earnings potential and earnings level within the rolling industry. When it comes to the Metal Markets, do remember that always that the results here are driven by the raw material price development, as well as the LME price development.
We do expect also here to see some cost relief in Q3, also here we do expect to realize lower average LME prices in the third quarter compared to what we did in the second quarter. Turning to Extruded Solutions. On the underlying EBIT as reported, we do see a decline from NOK 957 million in the second quarter to NOK 772 million this quarter. The main driver for the result decrease is really the impact from the cyberattack, which we estimate to be between NOK 150 million-NOK 200 million. If we adjust for this, you would see that the result for the second quarter of 2019 is pretty much in line with what was a record strong second quarter result in 2018. If we look at this from a volume perspective, we see a 7% decline in volume.
This is more than what we ascribe to the cyber effect, indicating that some of the markets are becoming somewhat softer, in particular in the European market. Also makes me very happy to say that in the softer market quarter with improved performance on the margin side. If we look into next quarter, we expect very limited effects, if any, from the cyberattack, as we have seen operations returning to normal in all areas. On the market side, we do continue to see growth in most of our markets, but at a lower pace compared to what we saw in 2018. In particular in Europe, also a relatively flat market on the building construction in the U.S., remember that the building construction market in the U.S. are at a very high level as we see this.
In energy, we saw a result that more than halved from NOK 417 million in the second quarter of last year to NOK 176 million in the second quarter of 2019. This is primarily driven by production. We have 20% lower production, which leads to significantly less net spot sales into the market. The effect of this is roughly NOK 250 million. The remaining delta is a combination of somewhat lower commercial results, but also a little bit lower price picture. If we look into Q3, we will expect to continue to see relatively low production figures for the third quarter as we move production into the fourth quarter and the winter months, as we have stronger price signals in that period. Again, please remember that the production estimates in energy can change very quickly based on hydrological changes as well as price signals for different periods.
On a price perspective, so far in Q3, the NO2 prices has come down from the Q2 levels that we saw of roughly NOK 360 per megawatt hour, down to roughly NOK 318 per megawatt hour. Turning to other eliminations. This netted to a negative NOK 258 million this quarter, which is really compared to similar levels that we saw of NOK 229 million last year, and NOK 261 million in the first quarter this year. The other line really consists of corporate costs in addition to cost in holding companies as well as industrial insurance. This quarter, we had a cost of NOK 253 million, roughly NOK 100 million higher compared to last year, and somewhat above our annual guidance. The increase in corporate this time is really driven by the cyber attack costs.
Here again, we don't expect any significant impact in Q3, which should take us back down to our guided level of NOK 175 million to NOK 200 million. Finishing up on my part with a look on the net debt since last quarter. Overall, our net debt position increased with roughly NOK 3 billion, which basically reflects the dividends we paid to our shareholders in May this year. Debt position of NOK 12.1 billion. We've generated NOK 2.9 billion in underlying EBITDA for reasons I've been through already. We had a release of NOK 1.3 billion in net operating capital. Please remember that this is normally a quarter where we do build capital and not release it. Part of the explanation is a reduction in prices, which, of course, helps net operating capital level.
Also, it is partly due to our improvement efforts, trying to take back the safety stock buildup we had in 2018 on the back of the Alunorte embargo, as well as the RUSAL, or the threat of RUSAL sanctions. The release of further working capital will, of course, be high on the agenda also in the quarters to come. We've had a negative effect, NOK 1.6 billion in taxes and other. Roughly NOK 1 billion is tax, and NOK 600 million is adding out billion in CapEx. Then we will come back with an updated figure on September 24th, 2019. Other includes mainly currency translation effects on cash and debt, as well as some other minor adjustments. Let me finish off by saying also just one comment on net adjusted debt.
This increased with roughly NOK 3.2 billion, which reflects the increase in net debt that I've just discussed, meaning that the net adjusted debt ends at NOK 33.3 billion at the end of the second quarter. With that, Hilde, I'll give the word back to you.
Thank you. To summarize the second quarter. We have focused on the positive side that we are back in Brazil relating to the ramp-up of the production sites. We see the tail now of the cyberattack that hit us hard in March. The results are unsatisfactory. We as a management, our focus now is to work on what we can influence in this situation, taking also into account that the macro sentiment now is weaker, which add to the challenge. We have, as many of you know, launched a forceful improvement agenda, which the whole organization is working on right now. It's about safe and efficient operation. That's always key priority. We simply have had also too many incidents in the past and which we need to work on in terms of having a robust and stable operation that's the backbone of the company.
Obviously, we need to fix Brazil. We need to come back in full operation and demonstrate that these assets, which are in the first quartile on the cost position, is really creating values for Hydro. We are now well into the strategic review and the restructuring of Rolled Products. It's unsatisfactory, the performance we have had over a long time, and we need to address that forcefully. We have engaged the whole organization. I am really proud of the Hydro organization. We mobilize when things are difficult, and right now, the whole organization is working on revisiting the improvement agenda. As we know, we have been falling behind simply because we had the embargoes in Brazil, and we will come back on new forceful improvement efforts which will come into on the Investor Day.
We will focus on strict capital discipline in the situation we have now and also the capital allocation framework going forward. We talk about lifting profitability, driving sustainability. We believe that with our position in Hydro, with the low carbon position we have based on the primary part, which is based on renewable power, we have a lot of capabilities which we now want to explore into more recycling and promote low carbon brands.
Thank you very much, Hilde and Eivind. We open for questions from the audience, either here in Oslo and also on webcast. There is a question here in the back.
Yes. Good morning. Eivind Veddeng, DNB Markets. Two questions, one first for Eivind. The capital release or the working capital release of NOK 1.3 billion in the quarter, how much more capital can you release over the next 12-15 months? After, I guess this comes from a normalization of Alunorte and the result situation.
Of course, Hilde will address this more on September 24th, 2019. What we've said in 2018 is that we had, let's say an online bill of roughly NOK 4 billion in operating capital on the back of the Alunorte embargo and under the threat of the RUSAL sanctions. Obviously, we are trying to get that back. The NOK 1.3, I think you can split roughly in two. Half of it is price-related, and half of it is actually getting the underlying improvement in place.
Thank you. I guess for Hilde, on the cost curve. How does the cost curve look now in alumina and aluminum, i.e., how many producers are currently loss-making? If you just take the current price and raw material costs. On Alunorte, after you have installed the new press filter technology, where would that asset be on the cost curve?
I think the last part I will come back to on the Investor Day, so to make sure that we have a better target of how the press filters will develop. I think I'll leave the alumina question to you, Eivind.
Thank you. I think the alumina price today is currently around $296, which means that we came from a situation where basically everybody was making money on alumina when it was around $350 or so, into a situation today where you can argue that 10% to 20% is losing money. We're also getting into the more normal situation, where we're starting to see exports of Western world material going into China, then we'll see what kind of adjustments they will make. When it comes to the cost position, if you allow me just to make one comment, Alunorte, even today, is very favorable based on the cost curve, very much to the left on the cost curve.
As we get the production back up to 75%-85%, 85%-95%, you get fixed cost dilution, which will move you even further to the left of that cost curve. It's a well-placed asset.
Thank you.
Question here from Hans Erik in the first row. Yeah. Coming. I'll just coming.
Hans- Erik Jacobsen, Nordea. Within Extruded Solutions, you're guiding weaker European markets. Is that entirely due to weaker economic growth, or do you see some increased exports from China within this area as well, like we are experiencing within Rolled?
Well, there is a difference between Rolled Products and Extruded Solutions because the Extruded Solutions business is a more local business. The metal doesn't travel that much between this region in Extruded Solutions because that is more working with the local customers on a continuous basis. From that side, it's different between the Rolled Products and Extruded Solutions. In Extruded Solutions, I pointed to the automotive industry, which is more general in all aspects in the automotive industry, and there's insecurity.
It's general market weakness then, not increased imports? Back to Brazil. When do you expect cost to come down to the pre-embargo levels?
Yeah. It's obviously based on how fast we can return to normal production, because that has a bearing on the cost per ton. When our raw material prices come down at the level that we had in Q4 2017, we should be in as good situation as we were at that time.
Thanks.
Okay, thank you very much. Any other questions here? I know we have, Stian, some questions from the webcast.
Yes. We have a question from Cedar Ekblom in Bank of America Merrill Lynch. Would you consider curtailing loss-making smelters in Primary Metal?
Well, what we have been working on in the primary smelter portfolio over several years is to make sure that we have a robust cost position also to stand through periods where LME is low. It's costly also to curtail, and with the position that we have in the primary smelter portfolio today, based on renewables, we don't have any plans to curtail primary smelter capacity.
A question from Daniel Major in UBS. Are there any reasons why unit costs for primary should not return to the level seen in 2017?
We believe that if we have the same raw material price level as we had in Q4 2017, we should come back to these levels.
There's a cyber attack impact of around NOK 600 million. Are you expecting the vast majority to be covered by insurance? Can you give some idea on the timing for the insurance compensation?
I leave that to you, Eivind.
Thank you. As in previous quarters, I will not comment specifically on amounts we have insured. We have said in the past that we have a robust cyber insurance, and we still stand behind that. We do expect to not necessarily see that all insurance compensation comes in the same quarter, actually it may be spread over several quarters. We do expect to see the first proceeds of insurance to come in the third quarter. The significance of that, we will have to come back to when we close the quarter.
Another question from Daniel Major. You highlighted weakness in North America construction and broader slowdown in growth in key extruded product business segments. Do you see risks to the forecast of 10% growth in underlying EBIT that you provided earlier?
I think when we talk about weakness in the building construction market in the U.S., it is basically zero growth. It's zero growth from a very high level. I wouldn't necessarily call it weak. We continue to see good development in Extruded Solutions. Obviously Q1, Q2 is impacted by the cyber effect. If you adjust for that, you continue to see good performance. Extrusion Management and Hydro Management is also confident that we will continue to deliver the improvements going forward, also in the 10% growth.
A couple of questions from Ioannis Masoulas, Macquarie. Will you be able to reach full capacity with nine press filters, or do you need to invest in the 10th press filter to reach full capacity? If so, are you willing to invest more in today's environment of weak alumina prices?
Well, at this point, we focus on optimizing based on the first eight and then the ninth. We will see how far we get by learning the technology, learning the equipment, learning how to optimize the maintenance structure, the cycle time. It's too early to talk about a 10th filter.
Okay. That was it, Stian. Anything else here from Oslo? No, then we will leave it with that, and say thank you very much for joining and see you at the Investor Day on September 24th, 2019. Thank you.