Nalco, Hindalco jack up aluminium prices

LME price surge prompts majors to increase rates by Rs 6000 a tonne

The state-run National Aluminium Co (Nalco) has hiked selling prices of basic aluminium products by an average Rs 6,000 per tonne "" the highest increase in one and a half years "" effective from today, a company source said. Prices of rolled products have also been raised by Rs 7,000 a tonne, also effective from today.

Hindalco, one of the premier domestic aluminium producers "" has followed suit by revising its aluminium selling prices upwards by Rs 6,000 per tonne effective from today.

The hike in prices has been attributed to a similar rise on the London Metal Exchange (LME).

In November, when prices were hiked by Rs 5,000, ingot (IC20) rates rose to Rs 96,500 per tonne, while billets (CH10) were selling at Rs 99,500 per tonne. Also, while wire rods (WE20) were priced at Rs 1,04,500 per tonne, alloy wire rods (WA20) were sold at Rs 1,07,000 per tonne.

On the LME, aluminium prices have moved up to a 10-year high on the back of continual rise in demand from consumer industries, combined with production-cuts by large companies. Today, aluminium prices have, on a three-month basis, shot up to $2,168 per tonne and the momentum continues.

Despite frequent hikes in selling prices by Nalco (a Rs 3,000 per tonne hike last month), prices of imported aluminium are about Rs 10,000 per tonne higher than that of the domestic variety. Thus, local prices are competitive, Nalco sources pleaded.

Aluminium producers in the country revise prices on a monthly basis depending mainly upon their movement on the LME, the demand-supply scenario and economic development around the world. In the physical market, aluminium ingot prices have jumped by Rs 500 per quintal to Rs 11,000 per quintal, while aluminium utensil scrap rose by Rs 200 per quintal to Rs 8,800 per quintal in November.

"Primary producers are increasing prices on account of rising sentiment in the domestic as well as the international market," a trader said.

On the domestic front, there are five frontline aluminium producers, which tripolarised into Nalco, Hindalco (includes Indal) and Sterlite (includes Balco and Malco), and price decision taken by Nalco is followed by all integrated producers.

The current price hike by domestic aluminium producers is the consequence of China's aluminium industry's decision to cut 10 per cent production in order to control overcapacity. The Chinese industry includes 23 major producers.

If the need arises, the industry is prepared for more production-cuts in future, a local trader said.

The charter of 23 major aluminium producers and traders of China has authorised Minmetals, the largest base metals trader of the country, and Chalco, the biggest producer of alumina and aluminium, to negotiate for alumina imports on its behalf.