This article first appeared on GuruFocus.

The Midwestern Premium (MPW) hit $1,600/tonne in September 2025up 105% in six monthsdriven by Trump's escalated 50% tariffs. For CENX, with 58% U.S. revenue, this translates to $150200M incremental EBITDA in FY2026, per management guidance. Make no mistake here, this is a tariff play more than anything. I'm betting on the administration being hardstuck on these rates for the next 3 years and I plan on capitalizing on it too.

Warning! GuruFocus has detected 12 Warning Signs with CENX.

Is CENX fairly valued? Test your thesis with our free DCF calculator.

This analysis poses a single investment question: Does Century's exposure to U.S. premiums and low leverage make it the best-positioned aluminum pure-play under current tariffs? The answer appears affirmative, based on its structural advantages in operations, pricing dynamics, and financial resilience. Unlike diversified peers burdened by higher debt and regional exposures, CENX's integrated supply chain and balance sheet enable it to convert premium uplift into superior free cash flow (FCF) with minimal risk.

CENX is a vertically integrated aluminium company. It became this in 2023 when it acquired a 55% stake in the Jamalco smelter and mine in Jamaica. The deal opened up a supply chain of bauxite which gets turned into alumni which then gets turned into aluminium and sold off. Operations is a joint venture with the Jamaican government, but CENX buys all of the bauxite and alumina produced there for market price. Just 2 months after the acquisition there were some issues at the factory which disrupted production. It continued into Q1 2024 but it seems it has settled down now.

The sustaining capital needs is $10 million, but CENX has invested $15 million additional to get production to max capacity. We can work backwards and estimate the mine capacity, since the Jamacla smelters have a 1,4 million tonne capacity. Generally speaking you need about twice the amount of bauxite to make alumina, based on a 92% average recovery rate. So the mine has about a 3 million tonne capacity. This makes it one of the largest in the country as total country production is about 4,5 million tonnes. Reserves sit at 29 million which gives it a 9.6 year life span. Not that much frankly. But CENX has the capital to invest in new mines and secure supply ($40.7 million cash and $58 million trailing OCF).

There are three types of prices we have to consider when looking at aluminium companies. These are: LME, MPW and EDPP. The first refers to the global price of aluminum, the others for the regional premiums added on. The Midwestern Premium MPW is the highest one, and the one growing the quickest, up 105% on a 6-month basis. EDPP is for the European Union zone and has instead fallen slightly. Europe has strong aluminium supply chains so the need to pay higher premiums is unnecessary. Demand has also wavered which has impacted prices as well.

LME prices rising YoY by 7.5% indicates higher demand from other regions, like Asia. China was responsible for 32% of the global demand back in 2023, much of that going towards construction. Imports in India are one the rise however, growing at 3.3% annually since 2021. It seems this region is picking up the slack when the EU experiences lower demand.

CENX has smelters in the US and in Iceland at the Grundartangi facility. Sales were deadeven on a 6-month basis with losses in US production being offset by increases in the Iceland factory. CENX is therefore exposed to both MPW and EDPP prices. Since MPW is drastically higher (3.54x compared to EDPP) most of the revenues comes from the US smelters: 58,4% vs 41,6%.

Now what's really interesting about CENX is that it has a supply contract with Glencore (GLCNF) to buy a set amount of aluminium each year. This is only natural as GLCNF owns 42.9% of CENXs common shares. In the first 6-months 59.1% of all revenues came from these sales, down slightly from 60,8% a year earlier. Because of this corporate structure I see it as highly unlikely CENX would not see its production find a buyer.

spot Midwest premium today is sitting at close to $1,600 per tonne or $0.72 per pound. Just please remember, while these tariffs became effective in Q2, they will only partially affect our results in Q3 and then be fully reflected in our results in Q4.

I choose to include this remark by CEO Jesse E. Gray from the earnings call. They have the finger on the pulse all the time and many investors might have hoped to see an immediate benefit of the tariffs. It seems we will have to wait a little bit.

You can see the impact the new tariffs rate had on the spot prices. The rally began on June 2, the same day that Trump signed the 50% tariff rate into the books. He first began setting tariffs back in 2018 when foreign aluminium faced a 10% tariff. In May this year it rose to 25%. I don't think anyone is expecting it to go higher than this, but if it does, expect to see the same price hike. Going off the net sales from the US smelters of $189 million we should see about 90 - 100% increase compared to Q4 2025 and Q1 2026 when mentioned by management the full effects will come into place.

Based on the 6-month results CENX produces 376,000 tonnes in the US. The LME and MPW together bring the price to $3.980 per tonne. So by this assumption revenues from here should be $1.5 billion minimum. The Iceland sales are $900 million per year so the analyst estimates seem to be quite accurate here. Still puts shares at a very conservative 1.01x sales next year. Since the sector trades at 1.4x sales it begs the question whether shares have more room to grow. I think it does.

On a peer basis CENX looks solid. It has the lowest leverage by a fair margin, the highest FCF margin out all. EV/EBITAD is a premium to peers, largely in part to how much the stock price has risen the past 12 months, outpacing all other - 91.5% comapred to 5.83% (KALU) and 3.03% (CSTM).

Forward figures a premium in all three metrics, reflecting the position the company has in regard to short-term cost inflation because of tariffs. Meaning, CENX can benefit greater than the other two can.

Based on the FWD EPS growth estimates CENX pulls further ahead, (set over the next 12 months):

CENX - Diluted EPS 129%

KALU - Diluted EPS 33.66%

CSTM - Diluted EPS 19.89%

Now it should be mentioned that because CENX has recored an increase in unrealized losses on derivates, the FWD growth rate is exhaberated to a degree. But adjusting for the $14.5 million change last quarter the FWD growth looks more to be 88%. This still far outpaces the rest. Why this happens comes down to CENX having less cost of goods sold, relating to tariff expenses then the rest.

The tone in the last earnings call by all three also differed widely. CENX cited this when discussing the new tariff impacts, raising it from 25% earlier in the year to 50% during the summer.

Because of our contractual lags on our revenues, the strong price environment we see today will continue to drive our earnings growth beyond Q3 and into Q4.

Kalue on the other hand provided much more caution when discussing tariff imapcts, citing less postives then CENX.

Given this uncertainty, especially as it relates to tariffs, we continue to believe the impact of projected tariff levels will continue to have a neutral to slightly favorable impact on our earnings.

Lastly CSTM provided perhaps the most bearish comment on tariffs, citing it had so far impacted their gross profits and likely would continue to do so.

These extrusions have become more expensive under Section 232 tariffs which impacted the first half by around $7 million on a gross basis.

This explains why shares of CENX has performed much better this year comapred to its peers. It also substantiates my claim that its the most well positioned aluminum company right now. This is unlikely to change as well. The others could decide to sell elsewhere but would be forced to enjoy far lower aluminum prices, since the Midwestern ones are the highest in the world right now. Setting up production in the US is also not something that can be done quickly. Tariffs aren't a permanent thing and will likely pass in time. It remains a fact that CENX will benefit the most in the short-term with higher earnings. This trickles down to it being able to build up a stronger balance sheet, make acquisitions and come out stronger after this then its peers.

I touched on this earlier, but the durability of CENX revolves around it having already set up production within the US. You'd normally divide the establishing a production site into three phases for aluminum, or any other mineral for that matter.

Phase 1 = Site selection, feasability study. Normally takes 6 - 18 months.

Phase 2 = Environmental permits, land use, building, air/water discharge. Normally takes 12 - 24 months (can overlap with Phase 1 somewhat)

Phase 3 = Construction and commissioning. Building, installing and running trials. Normally takes 18 - 36 months.

So on the low end a new company would have to wait 3 years, but it could take upwards of 6.5 years. CENX already had some idle capcaity which it in August decided to invest $50 million into restarting and produce north of 50,000 metrics tons of aluminum. Since it was idle all of the infrastructure was already there and it will be up and running by late June next year. This means it will have even greater production capacity during the next 2 years atleast, which coincides with the last 2 years of Trumps presidentail term. It seems reasonable he will keep up the current tariff rate based on the administrations rhetoric about promoting domestic producers.

This converts into large earnings genreation the next 3 years atelast. Forecasts put CENX at $3.8 - $4 EPS for both 2026 and 2027. At the same share count (93.3 million) as now it comes out to $354 - $373 million in earnings. This would be higher then any previous year before. 2024 was would be a close second as it reported $302 million in annual earnings. Already having a low leverage I see most of this going either straight into building up a cash postion which will used to acquire new assets or used for buying back shares. Since the shares have already ran up so much this year the first option seems to be the most likely.

Compared to the others the earnings growth is lagging, CSTM estiamted to even report a decline in 2027. This supports my claim CENX is the best positioned aluminum company in the markets right now.

Going beyond the current tariff policies which are temporary. Even prior to this CENX has made considerable improvements to its gross margins whereas the others have seen theirs decline. This is a direct reflection of its cost base improving over time. It seems likely it will post gross margins above its peers in the FY2026 full year results if trends keep up. Since it has a vertically integrated operation now where its partial investment in Jamacla helps bring in bauxite it should transalte to slightly lower then average purchase prices, given the partnership and ownership strucutre. This supports the argument that rising gross margins are not just a phase, but a lasting quality of the business.

The biggest risk now against my aluminium thesis is that domestic demand goes down. As I've outlined, the single reason for CENX seeing higher revenues is because of the tariff policies now set in place.

But if demand wavers then there isn't much benefit to them after all. CENX would report a higher net selling price, but volume would likely crumble, offset a little by the Glencore agreement. Since 2024 the North America demand for aluminum has fallen significantly, 50% from late 2023 levels.

The risk of less affordable aluminum prices is significant, since many US industries rely on prices staying low. I think we might see a lot of closures in the US because of this as cost cutting just won't do the job if import costs rise 100% overnight. Depending on the impact the current administration might choose to cut back tariffs and go back to 25% instead.Since the stock rose because of the tariff implementation my logic is that it will just as quickly if the same tariffs are backtracked on. CENX is not a very leveraged business (1.73x leverage ratio) so this remains the biggest risk for the company.

Asian markets are showing incredible strength even as LME prices are rising. Even if US demand has wavered, due to the agreement with Glencore CENX still has an accessible revenue stream and gets all the benefit that the tariff rates have had on domestic prices.

Historical performance has been better then peers and forward earnings growth is outpacing by a wide margin. being a vertically integrated producer also ensures gross margins are higher then peers. Despite tariffs liekly being temporary, CENX can benefit by growing its earnings and funneling that to build up the balance sheet or buy back shares and reward long-time shareholders. Both options are lucrative and help support the investment thesis.