Continued from Part One.
For Nalco, one of India’s largest state-run aluminum producers, the recent slide in metal prices pinched its profit margins to the smallest in 12 years.
In a PTI interview, its chairman had admitted that all their calculations with aluminum “had gone wrong.” So much so, that to shore up its bottom line, Nalco, also a producer of energy, was actively planning to invest US $2 billion to generate and sell electricity.
Primary aluminum production is concentrated in countries like China, which alone produces around 26 percent of the world total. The top producers besides China are Russia, Canada, The United States, Australia and India. Almost 20% of the metal produced in China and about 30% in the rest of the world is unprofitable, according to a Goldman Sachs Group report released on July 3.
In June last year, the price was around $2,525 per ton on the LME, but in June 2012, it stood at $1,885.
But as of now, from all available indications, it seems Indian aluminum producers may not yet go in for a major cut in output despite prices having fallen so low on the LME. They are still hopeful for a turnaround in this year’s second half.
Many share the optimism of Bagra, who was quoted in a media interview as saying that he was hopeful the price of aluminum at the LME would come up to $2,000 per ton in the next two to three months.
Also, many such as Vedanta continue to get high premiums on their supplies despite prices having fallen drastically on the LME — but then, that’s a different story altogether.
Sohrab Darabshaw contributes an Indian perspective to MetalMiner.