Nalco ups tags by Rs 5000

Aluminium hits $2,522 on LME

State-run National Aluminium Company Ltd (Nalco) raised aluminum prices by Rs 5,000 a tonne across all product categories, as aluminium prices on the London Metal Exchange (LME) are on the rise.

With this hike aluminium ingot (IC20) is quoting at Rs 1,21,250 a tonne, while billets (CH10) have gone up to Rs 1,24,250 a tonne. Aluminium alloy ingot (IA10) too surged to Rs 1,18,850 a tonne, while aluminium sow ingot (SE07) perked up to Rs 1,21,300 a tonne.

Aluminium cast strip (CS10), standard coil of alloy (AA8011) and standard sheet of alloy (AA8011) are selling at Rs 1,30,600 a tonne, Rs 1,41,300 a tonne and Rs 1,42,300 a tonne respectively.

Domestic aluminium producers revise their basic selling prices on wide fluctuations of the metal prices in the international market. However, in absence of volatility prices at times remain flat for months.

At present, the prices of metals on the LME are surging on the back of rising demand and projected short supply for this calendar year.

Aluminium prices on the exchange on Thursday crossed the psychological barrier of $2,500 a tonne and touched a new high of $2,522 in the morning trade.

This indicates a gain of $167 for the month, from the $2,355 level on March 1. Meanwhile, stocks during the month grew by a meagre 4,800 tonne to 7,80,325 tonne.

As per reports, supplies from across the world have been disrupted, as the demand from aluminium-producing countries too has risen substantially. This is significant as aluminium warrant on the LME reduced by 23,825 tonne to 6,99,100 on March 29.

Nalco is targeting post-sales revenues and gross margins of Rs 500 crore and Rs 220 crore, respectively, for the next financial year starting April 1.

The current rise in the prices has been mainly attributed to the announcement made by the International Aluminium Institute, suggesting a decline in world aluminium inventory levels by 1,06,000 tonne to 3.159 million tonne, from a revised 3.265 million tonne in January.

Supplies in the world aluminium market are expected to shrink further, as Venezuela's state-run aluminum company, Venalum, has decided to effect changes in the quota system, based on which it used to sell aluminum overseas.

The company will also reduce exports of its products this year to meet local requirement.

Venalum is planning to reduce exports to 50 per cent this year, from 72 per cent in 2005. It sold 4,44,000 tonne aluminum in 2005.

Besides, the country's largest aluminum smelter is re-negotiating a four-year contract to sell 90,000 tonne aluminum a year to its Japanese partners. Talks regarding a possible Japanese investment in Venalum's expansion plans will begin later this year.

Being bullish on aluminium in the near term, companies like Sual and Russian Aluminum (Rusal) of Russia have increased their production capacity substantially.

Russia's second-largest aluminum producer, the Sual group, is planning to scale up its annual output by one million tonne from the current 9,20,000 tonne within the next five-seven years. It is planning to build either one 1-million tonne (aluminum) a year smelter or two smelters with an output capacity of 5,00,000 tonne each.

Rusal will also commission a new aluminum smelter with a capacity of 3,00,000 tonne of primary aluminium a year in the constituent republic of Khakasia by the end of this year. Rusal is investing $750 million in the project.