To answer all questions after the presentation. Also we have the web. Before we start, I would like to remind you of the caution note in relation to certain forward-looking statements that we have provided in the presentation materials. With this short introduction, I'm pleased to hand over to Svein Richard Brandtzæg.
Thank you, Stefan. Q2 delivered improved quarterly results due to higher volumes, better margins, and higher aluminum prices. Thank you. All in all, we sold more aluminum to better prices. First of all, we are happy to confirm the integration of Alunorte, our new employees. We're happy to confirm that the $300 program, and also now the ramp-up of Qatalum is continuing. Second quarter market situation was a fair market, which means that we also are maintaining the 7% growth for 2011. However, with higher degree of uncertainty going forward due to the macroeconomic situation. Underlying result is NOK 450 million better than the previous quarter, NOK 1.3 billion better than the fourth quarter of last year.
This is very much due to several factors, but the improved volumes in Alumina and Alunorte, very important contribution. Better prices for alumina and aluminum, somewhat offset by higher input prices. We had strong contribution from energy, seasonally lower volumes and lower prices, but still good contribution. Metal markets, higher volumes, better margins, and fairly stable results in downstream. If you take a closer look into the metal products upstream sales, we had 5% improvement in volumes in extrusion ingots due to higher demand in extrusion. Keeping our 4% improvement since the previous quarter. Fairly stable in foundry alloys after a 19% improvement in the first quarter. We have now included the Albras volumes, 122 kilotons, Albras volumes in the second quarter.
In the first quarter, we included only 43 kilotons Albras volumes. If you take away Albras volumes and compare first half year 2011 with first half year 2010, we have in total 6% higher metal product sales. The picture is more mixed when we take a look at the downstream situation. We have had a fairly stable total volume in rolled products with a seasonal upswing, higher volume in extruded products. In the rolled products, we had lower sales to automotive. We experienced destocking in litho and foil, and we had better sales in can and general engineering. In extruded products, Europe seasonal 4% higher than previous quarter, 7% higher in building systems.
There we have a very weak market situation in building and construction in Southern Europe, and especially Iberia. We have a fairly stable situation in France, and improvement in building system in Germany. In North America, 9% higher than previous quarter, driven by increased sales to transportation. We have a healthy situation in South America, following a seasonal lower demand for extrusion in Brazil in the first quarter. Precision tubing, lower, especially related to lower sales to Japanese OEMs in North America. Overall, stable quarter by quarter, but 3% higher first half 2011. LME settlement prices vary between $2,500-$2,600 per ton. Due to forward pricing, prices for the second quarter will be reflected in the third quarter result.
The realized LME for the second quarter was $2,509 per ton. If you take a look into the inventories, we are at a similar situation today as we were in the first quarter. Due to higher demand, the inventory days are trending down. There's a small release from alumina inventories from 4.6-4.5 million tons. All in all, fairly stable. If we include all the inventories globally, we estimate about 11 million tons in total, which corresponds to about three months of production. These inventories are locked into financial deals. These target inventories are well known in the market and are of course limiting access into the physical market of standard ingots.
This is also reflected in the development of ingot premiums, which will remain at a high level in Europe, stable in Japan. We saw a significant increase in ingot premiums in the Middle East, in the US premiums. Very much related to three factors. One is the warehousing deals. Second one is increased demand in the US market. The third one is less import from South America to the North American market. We follow China carefully. We view China as a balanced aluminum market. The increase in production in China was 30% in the first quarter, which is again to support the domestic demand, which increased with 20% in the quarter. China is now consuming about 20 million tons. Significant volumes.
We also follow, of course, the balance on import and export. China continued to import a similar amount of scrap as before, but we saw a significant increase in export of semis from China in the quarter. This we are following carefully. We don't see that this is impacting our main markets in downstream in Europe or U.S., but it is impacting the local Asian market. New capacity are now moved from high cost areas of China, Southeast over to Northwest, and then replacing high cost capacity with lower cost capacity in China. As of today, we see the market outside China in balance.
As I mentioned, we maintain a 7% growth estimate for 2011, with the uncertainty that we have to add due to the more volatile market environment and global macroeconomic situation. The capacity now is, or some of the capacity is still kept outside the production. 1.2 million tons is restarted of the curtailed capacity, and there are still 1.3 million tons that can be restarted. The alumina market we view in the balance. The graph on the left side shows the volatile alumina price over the last year, and the right one is the Platts Index introduced in August last year, which gives interesting information about the development.
Alumina price at about $400 a ton recently, which corresponds to 15%-15.5% of LME. This is a very positive signals, but we have to keep in mind that there are limited volumes and also limited history in the Platts Alumina Index. Energy delivered good results due to good operation and good commercial performance in the quarter. If you take a look at the price development in Nordic market, we had a reduction in prices in the beginning of the quarter due to early snow melting due to warmer weather. In the last part of the quarter, we had additional reduction in prices due to heavy precipitation, which resulted in an improved hydrological situation in Norway.
After a very dry winter, we have now more or less come back to normal with regard to the hydrological situation. Bauxite and alumina production in Brazil, with the plant Paragominas, one of the biggest bauxite mines in the world. It's part of the deal we made with Alcoa, and then also Alunorte, which is the biggest alumina refiner in the world. We see potentials to particularly the increase in volume in Brazil, and we are now combining our capabilities, process industries, together with the high capabilities of our employees coming from Vale, the second biggest mining company in the world with a high skills and good capabilities in mining. We are now able to lift up the volumes in Paragominas with 12% in the quarter.
Yeah, of course, also can affect cost positively going down, and then also improve the volumes from Alunorte 8% in the quarter. We are of course attacking several areas. We are focusing very much on operational performance, very much on maintenance. That is changed from reactive maintenance to preventive maintenance towards predictive maintenance. We are targeting a more stable production on a higher level than what we have today. This is like picking up an aircraft, takes some time. It is not a quick fix, but we are on the right track. The $300 program that we have introduced in our fully owned smelters is continuing according to plan. We delivered $50 per ton improvement last year. This year, we are going to deliver another $125 per ton in improvement.
This is, in total, 1,075 dollars per ton in the end of the year compared to 2009. This is now impacting the results positively. If you take a look at the total portfolio, the cash cost went up $200 from 2010, due to higher input costs. $125 of the $200, it can be ascribed to higher alumina prices. The rest is due to higher energy prices, higher cost of petroleum coke, and weakening dollar. We have now also included Albras from first of March. What is interesting here is to see the EBITDA margin that has been developed positively over the last period.
$500 per ton in EBITDA margin in the first half of this year, significantly improved since 2010. We all have to go back to 2008 to find similar figures, $475 per ton EBITDA margin in 2008. At that time, the LME price was 1% Norwegian krone higher than the price we have today. This is important result out of the improvements. What I can say here is that we are targeting further improvement, of course, according to the $300 program, which is then affecting the fully owned smelters. Qatalum is ramping up. We had 71% of our cells full at the end of the quarter.
We had communicated previously that further ramp depends very much on the switching of steam turbines. I'm happy to confirm that we took over the first steam turbine in the beginning of July, means that the ramp up towards building according to what we said previously, that the plant will be in full operation at the end of the third quarter. If you take a look at the cash cost, we estimate, when in full production, if you take a 2010 market conditions, the cash cost of the Qatalum smelter is estimated to be $440 million if the LME is $2,000 a ton, and $1,500 a ton if LME is $2,500 a ton.
This is again some references to what we estimate the cash cost to be. We have decided to invest in new extrusion capacity in Brazil to get the automotive transport business that requires wider and longer profiles, which needed a new capacity. We are now increasing gradually our market share in Brazil. A very interesting growing, fast-growing market with good margins. That's an addition to our strategy to grow in emerging markets. We have previously communicated that we are investing in two new presses in China, targeting the heating, ventilation, and air conditioning market, which was previously held by local, and also the technically advanced extrusion market. We are not going to compete in China in the low margin commodity segment, but we are now talking about technologically advanced solutions.
We decided yesterday and agreed yesterday to divest our shares in power production company in Nordland in the northern part of Norway. This is a part of SKS Produksjon, which produces 1.8 TWh per year, 20.86%. We have had the dividends from the production company, which correspond to about NOK 30 million each year during the last couple of years. It is far away from our aluminum smelters, so it has no synergies with our 9.4 TWh of fully owned hydropower assets that are linked to the production of aluminum.
I'm happy to confirm that we are satisfied with the cash consideration of NOK 1 billion for these assets, for these shares, which will give us tax-free contribution to the third quarter result of NOK 650 million. The deal closing is in fact today. With that, I'll give the floor to my CFO, Jørgen Rostrup, please.
Let me then take you through briefly some financial results just like Svein Richard. I think the NOK 196 million in the quarter up 31% or NOK 400 million versus the first quarter. I'll get back to the business areas. Just draw your attention to other eliminations, which I will not refer to later. It's a significant change in the numbers. It's a charge of NOK 65 million versus a significantly higher charge in first quarter. This is due to two factors. It is now more or less neutral effects on the elimination of those internal inventory gains and losses. There was a large FX charge of NOK 160 million last quarter. That is NOK 160 million-NOK 180 million in change.
There is NOK 100 million lower cost charge this quarter. Several minor projects, several common functional staff functions, with a lower charge and also good earnings from the captive insurance company. It's more a one-off than anything else. You know, we're gradually taking down the cost, but we still guide on NOK 150 million in charge a quarter, not taking into consideration the inventory effects. Then if you look at the main explanation of that 0.5 billion improvement quarter-on-quarter, there are again, as you see, several smaller elements on the price and margin side. There is on the LME side, price and currency, 0.1 billion in positive effect.
Margins up and downstream, but primarily upstream is improving by 0.1 billion. Both at alumina, three months as opposed to one month, is a little bit more than a billion. The volume elements, on one side, aluminum being positive by 0.2 billion, but then as I said, the energy volumes are down for seasonality reasons, by the same amount, 0.2 billion. There are some other effects. Key financials, revenue is up 17% or NOK 3.6 billion in the quarter. A little bit more than half of that is related to the Vale assets being included in a longer period. The remaining is volume and price effects on our continuing business.
The same numbers for the year half year compared to last year's half year is 21%. Then we have a positive charge item excluded. There is a gain on item excluded, which means that we are actually having a reported EBIT higher than the underlying that we are more viewing as a performance EBIT. Financial income is a positive number this quarter. Obviously, we have lower financial interest than previous quarter due to lower cash balance. We have some more financial costs because of the debt that we took over from the Vale assets. There are currency effects due to the weaker dollar.
We have the debt that we have in dollar and the weakening of the dollar towards euro, Norwegian krone, and Brazilian reals has led to a currency gain unrealized on those debt elements. Tax expense is NOK 790 million for the quarter. There is a table for you detailing out this. We are on an adjusted tax basis at 33% tax, which is lower than previous quarter, simply due to the fact that the energy high tax earnings are a lower part of the total earnings this quarter. Briefly on item excluded, the three first elements being gains in total of NOK 6.6 million are all due to the development of commodity prices in the period.
There have been not least the decreasing LME during the quarter, and hence we have unrealized gains, not least reduced our operational hedging as we have discussed previously. There are rationalization charges of NOK 75 million that is divided on several smaller assets in Norway and also abroad. There are three, four elements that are adjusting capacities and closing or tearing down an old factory building. Impairment charges in solar company. It's an investment we have previously made in U.S. Due to the development of the share price in that company, we have taken down the book value of it. We haven't invested in this company for some time, and we will not invest, we assume, further in the solar business.
Then there are some gains on some smaller divestments outside our core business also. All in all, NOK 260 million in positive effects. Now let me address the business areas. If you remember last quarter, we are doing bauxite alumina as well as Primary Metal on a full pro forma basis, which basically means that we have adjusted our consolidated numbers and assumed the consolidation took place much earlier so that we have full quarters for the comparison, for the sake of comparison. Bauxite alumina is pro forma basis and also later Primary Metal.
In this picture, as Niklas said, alumina production is up 8%, bauxite production is up 12%, and sales are up even more, around 18%. We see improved production performance and in both core assets in the quarter. We've also seen higher alumina prices due to the fact that it follows in the contract portfolio the aluminum prices, and the LME has had an upward trend towards the quarter. There is a small delay. Remember that when we did the acquisition, we hedged for 2010 and 2011. As part of the transaction, we hedged a significant part of the additional LME exposure that we took on board at that time.
This was last spring, and we saw a very volatile market, and we saw a fairly robust pricing in the spring. We hedged around $2,400 and change for 2010 and 2011, the majority of the new exposure. There is a roof on the pricing, and the effect of the hedge for this quarter is -NOK 60 million. There are also some increased variable costs here. Goal number one is to improve continued production going forward, and that is aimed for third quarter and also to work on seeing that we can stabilize production at a higher level.
There are hedging elements then for the remaining years, for the remaining of the year, in total, similar to 180 kilotons of aluminum equivalents, which is covering the majority of the production in bauxite and alumina, for the remaining of the year. If we now look at Primary Metal, also pro forma numbers, we have an improvement of 30% on the EBIT results. Looking at this improvement of NOK 173 million quarter-on-quarter, three quarters of that, close to NOK 130 million, is due to higher prices and premiums mix.
We also had higher volume, implying an additional effect of NOK 70 million in the quarter, but that has been counteracted by a negative raw material cost development of the same NOK 90 million in the quarter. Qatalum had a negative result, our share 50% of NOK 16 million, which is a little bit down from last quarter. Remember, we had NOK 145 million in insurance proceeds last quarter. There is zero insurance proceeds in the Qatalum numbers this quarter. Now we are on a quarterly basis in a zero EBIT level. That should improve and become positive numbers eventually when we are heading towards that full production that Svein Richard Brandtzæg talked about.
Going into next quarter, 85% of our production, excluding Qatalum, has been sold at $2,575, so marginally up from today's level. Earnings overall obviously be also influenced by the dollar development going forward. We still expect some raw material cost pressure. As Henrik said, Qatalum on full production is expected by the end of this quarter. We are not on a pro forma basis for metal markets. We see a substantial increase in sales. It's a 14% increase in sales, and this is then primarily due to the Albras volumes and also increased volumes out of Qatar being marketed through this commercial division. Production on the remelters are fairly stable.
There is an improvement in numbers in result here of NOK 100 million up to NOK 244 million in the quarter. Half of that, approximately NOK 50 million, is due to gains on inventories that we have bought at a lower price level than what we have sold them at in the quarter. We have previously taken the hedge effect of that, but we are not able accounting-wise to write off the inventory values. Only when we realize these inventories, which we have done in the quarter, we see that. That is half of the effect. The other half is more a performance related effect. It is better prices and premiums, but it is also increased sales volumes and a good trading business in the quarter.
Going forward, we expect some lower remelt production in the first quarter. Not significant, but somewhat, we also expect some higher sales volumes, but only to a limited degree influencing the financial numbers. Still, you know, volatility in the numbers, which comes due to the trading and implications. On the rolling side, I think it's fair to say that we have stable deliveries in the quarter at fairly good levels, definitely at least in a historical perspective. Volumes are more or less neutral. It's a 1% down, and the EBIT number is exactly the same as last quarter, NOK 232 million. There has been lower cost in the period, so that has balanced out the lower volumes.
We see some markets, segments improving, and we are also seeing in some market segments, some destocking effects with our customers. Maybe also important to put a note on comparing second quarter this year to second quarter last year, which was, at a significantly higher, earning level, NOK 309 million. There is a 25% lower result for this quarter. That is related to, the 15% volumes that we are exporting out of Europe, and into primarily the US. It's also a much more favorable, margin picture last quarter also due to the higher, dollar value versus euro here. If you correct for that dollar effect, volumes and margins are very similar for the quarter also compared last year second quarter.
I think the most important on the outlook side is to mention that although we will have seasonality here, we feel we have a very solid order book for the entire year. Basically run our factories at a high production level. The picture is somewhat different in the other downstream segments that we have. A rather weak result extruded, although somewhat mixed picture. Overall, although we had a 5% increase in volumes due to normal seasonality development, we had lower earnings at result. This is primarily due to the European construction market, building and construction markets, which affect us in two ways.
The direct effect is obviously that we sell less to the European construction and building market, in particular in Spain, Portugal, and Italy. That is the direct effect. The other effect is that everybody is then working harder on those other segments. You get a general margin pressure in the industry in Europe as a secondary effect of this. When we looked at markets outside Europe, we had very positive development in South America. We also have positive development in the precision tubing business, which is a global business. They see good markets both in Europe, in the US, and in Asia, China. This is both for heat management in cars, but also for stationary.
We see good solid markets, but it's not enough to counteract completely the negative development in the core extrusion area. Going forward, there are some seasonality effects, but we expect a difficult construction market in Europe to continue, and we are taking swift measures in our building systems business to counteract this. Earnings-wise, we should eventually see some improvement, but third quarter could also be somewhat challenging. Energy had a lower result from NOK 200 million to NOK 210 million in the quarter. But we are still very happy to see the performance and the earnings and also the production levels.
It's a 20% lower production, but it was more than what we anticipated when we gave you the guidance in first quarter. There has been a much more healthy development water reservoir-wise in second quarter, and in particular in the second half of second quarter than what we anticipated. The production is higher in the quarter than anticipated. Going forward, we expect that better balance to continue and therefore to see a much higher production the next two quarters. Our best guidance is now that we are moving towards a normal production for the year, which means moving maybe above 9 TWh and towards that 9.4 TWh that we are saying is our normal production.
Cash development in the quarter, we have added NOK 0.9 billion debt in the quarter in net debt. We have generated from our business NOK 1.4 billion. We have invested a little bit more than NOK 1 billion in the quarter, half of this related to the Alunorte alumina area. We have paid dividend to our shareholders in the quarter. We have had a small increase in debt in the quarter, still at very robust levels, we believe. That is also then reflected in the adjusted net debt. The only change on top of what I said now is that simply for translation of a lower dollar, our share of debt in non-consolidated companies has decreased.
The adjusted debt level is more or less on the same level, approximately NOK 20 billion-NOK 21 billion.
The priorities for the rest of this year remains the same, to continue the improved performance in Alunorte alumina in Brazil, to continue also the repositioning of our fully owned smelters, continue to deliver on the $300 program, which is on track. Ramp up the Qatalum, of course, important part of the primary business. Finally, continue our strong focus on operational performance, on margin management, and not least to take good care of our customers.
Thank you. We are ready for questions, if there are any. Also remember, if you're following us on the web, you can also ask questions by typing out via the web. First up, from Bank of America, Netherlands.
Thanks, guys. Just a couple questions, I guess. Perhaps one for you, Jørgen, on the non-recurring items, and then one as well for Svein Richard Brandtzæg just on the aluminum market. On the non-recurring items, I'm surprised to see that the metal inventory gains and losses and then the currency translation gains and losses flowing through the underlying EBIT. Or have I misunderstood that, or is that where they're coming through?
Well, I need to have your question once more.
I'm sorry. Is it correct to say that in underlying EBIT, the metal marketing business included a gain on metal inventory?
Yes.
You think that's appropriate in terms of the ongoing.
Yeah, I believe it is, but let's see if we can work it out. I guess you are pointing to what you think is a different treatment of this element or.
Well, I guess what I'm trying to do here is I'm trying to get to sort of the predictability of your earnings.
Yeah.
My understanding was that underlying EBIT was meant to strip out.
Yeah.
these gains and losses which weren't directly related to the
Yeah. Your basic understanding is correct. With the exception in metal markets to the fact that the nature of the business in metal market is trading and commercial activity. When we then buy stock, we buy physical metal in order to buy and sell metal.
Yeah.
We feel we cannot take the effects of the currency and unrealized effects of that activity as, you know, item excluded.
Okay.
Because that is the core nature of the metal market business.
Okay, that is a factor. Okay.
That is an active position.
That's your mini Glencore?
That is. Yeah. You are upgrading us, I feel. Yes, that is an active position.
Okay. Can I just push you on the other one then as well? Translation effect of the Brazilian balance sheet, it looks like you put that through as a financial item. Again, is that included or excluded from the underlying earnings?
That is excluded from that.
That is excluded.
Yes.
Okay. All right.
Of course, the nature of the business in both our alumina and Primary Metal is not to take these active positions. It is to produce and sell at a typical margin.
Excellent. Okay, thanks. I just wanted to clarify. Just a quick question on the aluminum market in general. Do you have any comments on the complaints that we're hearing from users of aluminum about an artificial hype in the aluminum market being created by restrictions on load out from aluminum warehouses?
That's a specific factor that, for example, the market is affected by the limitation on metal into the physical market due to the locking of metal in the warehouse. We see the effect of it. That's clear.
Okay. Do you think the premiums would be lower if we didn't have these load out restrictions?
Since they are, if the metal in the inventories, if that metal was accessible into the physical market, I would expect that this would affect the margins equally. Maybe we should add that, you know, this is changing from time to time. There has been significant periods where the picture has looked completely different from how it is. Obviously, there is a relationship between a tight market and high margins, but there has been a very significant development in the procurement of the aluminum business. There is a high degree of liquidity and a quite sophisticated development for saving metal and for sourcing metal. That's a good part. That's how maybe some things improve.
Thank you.
Yes.
Well, I just would like to continue with the warehouse question. They obviously load out from the first of April next year to 3,000 tons from 1,500. Still, General Motors and others are complaining that is not enough. What would you advise those companies? Should they buy it all or have to produce directly and avoiding the warehouse? Second, totally different. You are very occupied in Barcarena and Brazil. Do you neglect, in a way, other possibilities to grow? Like, for example, BHP sold the aluminum business to the Japanese guys. Wouldn't that have been something for Hydro?
Yeah, with regard to, again, the comment on warehouses, I think there is a liquidity in the marketplace. There are of course big volumes locked in financial transactions. I would not be surprised if these positions with financial yields are rolled forward. There could be events that will release some of the metal. We should also note that we are talking about standard ingots that cannot be used for anything else than for remelting. There's also limiting capacity in the value chain for remelting this metal. Hydro is one of the few companies with excess capacity for remelting, so it will be a good business for us.
At least we see this as a business opportunity, but we are not expecting that the metal will be dumped into the market. Of course, there is a balance there. Maybe you can answer the last question, Glenn.
You can share. We can make sure you can correct me if I fail. Yeah, I think you are right in the sense that we are concentrating heavily on supporting the local management in Salou and also on the Vale assets. In addition to the $300 program, maybe we even should put that also on the list, which in total implies quite a significant growth in Hydro right now. Yes, we have growth and we are occupied with making good numbers out of that. I think we don't miss opportunities as such because obviously we are paying attention to what is happening. But you know, you have to make your priorities.
Right now we think it makes sense to concentrate on bringing the values out of what we have done rather than to run after new issues. We are concentrating for good reasons.
Thanks. Rob Clifford, Deutsche Bank. Just two questions. One on coke unit costs to, with the current plans for expansion, where do you think you can take that? And the second one is on strategy. You sold a power business, you've written down solar business, and that you won't be buying any more there. Is this the final cut from being an energy supplier and only looking at it for value meaning strategic position?
If you think about what we are now doing in Alunorte, this is a new chemical process. I should mention previously that we do have 105 years experience in process. We are using our capabilities and our confidence to improve the process. We have already mentioned that we can see potentials with regard to maintenance. We are changing from reactive maintenance to preventive maintenance, predictive maintenance. We are stabilizing the production in the sense that we are really contributing positively. I think our ambition is to raise further in Alunorte. That will, of course, cost. We see that there is a need to improve the maintenance, and when we say it, we probably if you don't increase the cost.
We think a good investment will reduce the cost. That is the balance. We are not working to do what doesn't need maintenance. We do it in a more systematic way, and in hope we are able to improve quality and reduce costs. If you go to the solar business, we, as you heard yourself, do this, but continue to develop. We have some positions there. We of course invest in the solar business in our building system solutions, but we don't need necessarily to produce the photovoltaic solutions that we are now implementing in building systems. We have the energy neutral building solutions, so we are using some energy. We have concluded that we don't produce the silicon or the monocrystalline silicon that is used.
The sale of energy shares, 10% share, of SKS Produksjon, that was a financial investment intended for the current reserves we have that and waiting for the dividend payments and now. We are at the same time over these years investing up to NOK 1.5 billion in power. We will continue both for our own usage, both to participate in Nordic power markets. We will continue to develop our power assets. That's part of the overall structure that we have not changed at all.
Steve Karpel, Metropolitan. Can you summarize what is your policy on like buy side of the aluminum? Are you hoping to kind of find a local ore for yourself?
Global market. The aluminum market is a global market. With our position, we will be among the companies with the biggest long position in aluminum. We will after developing our there have almost 100% more aluminum capacity than what we use in our own production. We have also contracts that we took over from Vale that we are going to honor. We are at least up to 2015 very limited on the pre-book aluminum.
Steve Johnson from Citi. Another question on the strategy. I was just wondering in terms of your investment in Brazil and what end game is there, what you hope to achieve. Clearly, you know, the extrusion business in Europe has been tough, building construction. I'm just wondering, you know, what you hope to achieve really in Brazil. Is that more on the autos side that you're looking to? And then maybe a second question, just following up on, you know, alumina. I know that you've said that really, you're not selling to the spot market now, and you don't think you're going to sell into the spot market for a couple of years. I'm just wondering whether you've actually sold forward higher capacity, say out of Alunorte.
Is there a risk that you may have to go into the spot market to meet those contract needs?
If you go to the extrusion investment in Brazil, this is a fast-growing market with good margins with the clear demand in several segments. We are targeting the higher added value segments, which need capability to produce wider and longer profiles targeting the transport. This is an interesting market for us. We are previously exposed in precision tubing market industries. Also targeting the automotive business. We also are in other parts of the high-margin market.
The exit and different markets
With regard to Alunorte, as I mentioned, we don't have available ton capacity because we are going to.
One of the complex that we took over from Vale. Up to 2016, not too much available volumes, but from 2015 onwards, we have increased the higher volumes from our facility that's available for commercial use.
We have a quite competitive aluminum portfolio should it be acquired. We're very much in a balanced situation with ours plus the long contracts we have. We feel we have a very comfortable aluminum position, and we are doing some contracts with spot market, and sell.
They've got very small volumes. I don't regard that to be a risk the way you phrase the question.
André Farias from JP Morgan. Do you expect China to remain a balanced market for primary aluminum, with all the new capacity that is coming online? That is in the second half of the next year.
Short term, China has a big
Along with them, my answer would be a bit different. I think that China is really building up the capacity according to demand. That is what they have done for quite a long time, and that is also what we see going forward at least short term.
What is rather than an importer than an exporter.
Yeah.
Any further questions? We have some questions on the web, but I think I have this basically covered through the questions that have been.
Yeah.
That's it for second quarter presentations. Thank you for your participation.
Yes.