Nalco could gain from taking greater risk

ANALYST`S VIEW

This is in spite of the fact that in the last five years, alumina spot prices ruled a lot higher than what Nalco could realise from term contract sales.

For the last lot sold a few days ago, Nalco got an FOB price of $457.57 a tonne in what turned out to be a keenly contested bid. We learn that Aluminium Baharin, which has long-term alumina supply arrangements with Alcan and now owned by Rio Tinto, put in the second highest bid for the Nalco lot at $455 a tonne.

The keenly contested bid goes to prove that alumina prices are finding support at rising levels because of supply crunch.

Chinese slump

According to Nalco Marketing Director P K Parida, the earlier three alumina sales in this financial year were done at $403.09, $427.77 and $425 a tonne. Interestingly, the underlying sentiment of the world market for alumina has remained bullish in spite of Chinese imports in the first four months of 2008 falling 300,000 tonnes to 1.7 million tonnes over the corresponding period of 2007.

The fall in Chinese alumina imports should be seen in the context of several white metal producing provinces