Century Aluminum Co. (NASDAQ:CENX) Q2 2020 Earnings Conference Call - Final Transcript
Aug 05, 2020 • 05:00 pm ET
Michael A. Bless
million from Q1. So that's LME and premiums combined $32 million Q1 to Q2 down. That's just a couple million dollars worse than we forecast to you in late April, as the last month of the quarter, as you'll recall, remained unpriced at that time, as it always does. And as you'll also recall, May prices, LME prices remained very low in Midwest.
We were able to partially offset this reduction via a $313 [Phonetic] million decrease in controllable costs and raw material prices. In addition, cash flow was quite strong. Operating cash flow for the quarter was $37 million and capex only $4 million. Cash on hand increased by $28 million. Craig will also walk you through the expected changes in realized commodity prices, Q2 to Q3, obviously the quarter that we're now in, and the impact that that change will have on our reported financial results in Q3. Obviously, the impact of those very low metal prices in April and May will be felt in the Q3 results, due to our normal two to three month lag. Those prices appear now to be behind us. At the current commodity prices, the company's performance is materially better than what the Q3 reported results will look like, and Craig will give you more detail and some data on all of that.
Moving along, as I'm sure you saw, we refinanced the debt issue that was due to mature in June of next year. That transaction only closed on the 1st of July. So obviously it's not reflected on the quarter-end balance sheet. Obviously, there's a higher coupon in the new issue, but we believe it was the right thing to do to get this done at this time. The terms of the new notes are attractive for early redemption, assuming conditions continue to improve.
In just a minute, Pete will provide you our outlook on the sector, including global supply and demand. I'm sure you've noted recent data indicating a decent upturn in global manufacturing activity generally. You all follow the macro data, so I'm not going to spend your time now providing further commentary at that level. But I will make a few brief comments on the trading conditions we're seeing in our specific markets.
The last two months has seen an encouraging pickup in extrusion and foundry activity in the US generally. As you know, that's driven largely by the automotive and certain parts of the building and construction sectors. Same is true in Europe. There we're seeing a good pickup in billet, foundry, wire rod, other markets. Obviously in all these markets, the recovery is still uneven. You've obviously seen activity in China looking broadly encouraging.
All this said, customers particularly in the US, do remain somewhat cautious. Our run rate of value-added product orders in the third quarter thus far is showing only marginal pickup from Q2. However, there's been kind of an interesting trend over the last couple of months. We've seen very strong spot