Non-ferrous metal prices likely to go up on China push

Return of the middle kingdom lifts global prices

The global aluminium and copper prices have shot up by $110-150 per tonne in the last fortnight even as the widespread fears over a slowdown of the Chinese economy are receding and China is returning to the metal market.

While copper prices on the London Metal Exchange (LME) are being quoted at $2,700 per tonne, an increase of $150 per tonne since June 15, price of aluminium metal has risen by $110 per tonne at $1,710 per tonne.

Domestic metal prices, which are tied to LME prices, are expected to increase in the next few days. While domestic prices of aluminium wire rods in June stood at Rs 94,000-95,000 per tonne, prices of flat products were being quoted around Rs 1,10,000 per tonne.

"Aluminium prices for July are likely to go up by around Rs 2,000-2,500," industry sources pointed out. Meanwhile, domestic copper cathode is being quoted at Rs 1,64,000 per tonne.

The major players in the aluminium sector in India are Aditya Birla group's Hindalco Industries and National Aluminium Company, with a capacity of 3.4 lakh tonne each and Sterlite controlled Bharat Aluminium Company with a capacity of 1.08 lakh million tonne per annum. Sterlite also has a copper capacity of around 1.8 lakh tonne per annum, while Birla Copper's rated capacity is 2.5 lakh tonne per annum.

Senior analysts tracking the sector told Business Standard: "The fundamental outlook on the sector hasn't changed in the long term and will continue to be bullish. The return of the Chinese in the metal market has firmed up prices again."

China accounted for almost 24 per cent of the total world consumption of around 6 million tonne aluminium in 2003-04, while copper consumption in China was at 3.25 million tonne against a global copper consumption of 16 million tonne.

A senior industry official said, "We expect that global aluminium price level will sustain at $1,650-1,700 levels for the next 6-10 months. However, copper is a very volatile sector and there could be slight corrections."

Due to the rise in mining production the treatment and refining charges for the copper industry have also increased in the last few days by 11-12 cents per pound, he added.

At present , the three month aluminium futures are trading at the $1,715 per tonne mark on the LME, while copper futures are at $2,634 for three month contracts.