Slowing demand, higher valuation point to weak outlook for Hindalco

Lockdowns in China, energy shortages in Europe and tightening interest rates may have an impact on production, leading to lower supply

The supply-demand equation in aluminium continues to look confused but it may be net-negative for producers. The global slowdown is clearly reducing demand for the metal across the automobile, aviation and beverages industries. However, supply is also being cut.

Weak downstream demand will have a negative impact on Hindalco’s US-based subsidiary, Novelis. North American can-maker, Ball Corp, which is Novelis’ largest customer, has cut its own volume growth estimates across North and South America, citing high inflation as a major cause of demand destruction.

While Ball has lowered its five-year growth estimates to the lower end of its earlier prediction,