The Hindu Business Line : Firm global prices lift aluminium stocks

Nalco led the rally with a gain of 7.01 per cent to Rs 477.95 followed by Hindalco, which rose by 4.03 per cent to Rs 203.85 and Sterlite by 3.93 per cent to Rs 853.70.

According to analysts, aluminium prices, which have jumped more than 28 per cent so far this year, are expected to firm up further. Aluminum for three-month delivery on the London Metal Exchange rose to more than $3,000 a tonne on Wednesdayfor the first time since May 2006.

With China expected to reduce aluminium output by about 6 lakh tonnes following power shortages faced by the country, analysts project that this might lead to a global demand-supply imbalance in the metal.

Rub-off

Indian aluminium stocks, according to analysts, tracked the rise in prices of the metal on the London Metal Exchange. One of the reasons for the current uptrend in prices is the fall in global aluminium production and the subsequent drop in supply, said Mr Chirag Khasgiwala, research analyst, Emkay Research.

The exports from India are also expected to rise with a fall in output from China, said analysts.

Other aluminium stocks such as Man Aluminium and Madras Aluminium also gained 2.13 per cent and 0.32 per cent respectively. Man Aluminium closed the day at Rs 644.05 and Madras Aluminium ended the day at Rs 48 on the BSE on Thursday.

China power crisis

The Hindalco stock recorded a trading volume of around 17.6 lakh shares compared to the two-week average of 12.4 lakh shares.

According to reports, aluminium smelters in some provinces of China stopped production, following power shortage, caused by the severe winter which damaged power networks in late January and early February.

On the other hand, Indian aluminium majors such as Hindalco, Nalco and Vedanta are on an expansion mode. The aluminium production in India, which is currently at one million tonnes per annum, is expected to quadruple to four million on the back of massive investments of Rs 1 lakh crore by aluminium companies.

Demand for aluminium is expected to grow by 6-8 per cent per annum over the next three years. While the Chinese aluminium sector has recorded a 37 per cent growth in 2007, it is expected to grow 27-30 per cent in 2008, registering a volume of about 16 million tonnes, analysts say.

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