With 2013 Approaching, Indian Aluminum Producers Remain Optimistic

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Despite a decline in profits for the first quarter reported by India’s state-run National Aluminum Company Ltd (Nalco), aluminum producers here remain optimistic about the sector. Most of this sentiment is based on the likely positive demand from the automobile and power sectors which are expected to see an increase in the last months of 2012, also dubbed as the “festive season” in India, when purchases generally register a hike.

India produces around 1.6 million tons of aluminum annually, of which about 1.3 million tons are used by domestic buyers. While its domestic demand is poised to grow by about 8 percent a year, this year’s export figures, too, are also expected to see a rise.

Nalco, India’s third-largest producer of aluminum, reported a 41 percent decline in net profit in the first quarter of 2012-13 having ended in June, against the same quarter of the previous fiscal year. The aluminum major registered a net profit of US $41 million as against $69 million in the same period last year.

Part of the loss was because sales went down to some extent — not entirely unexpected, given the market conditions. Nalco’s net sales were about US $309 million, as against about $311 million in the same quarter of the previous year. Nalco sold 6.4 percent less aluminum in the first quarter as against the corresponding period of the previous year, the company said.

On the production front, while bauxite production during this quarter increased, aluminum production per se had gone up during the corresponding quarter last year, the company reported.

Nalco, though, continues to pursue an aggressive expansion plan. Part of its optimism is based on the fact that India’s aluminum exports are most probably going to end up in the black this financial year despite the global slowdown, part of it because of smelters in other countries are shutting down.

Nalco’s optimism was borne out by competitor Vedanta. News agency Reuters, quoting senior officials of the company, recently reported that Indian exports of aluminum could rise 5 percent in the current fiscal year to 325,000 tons. Last year, the figure stood at 310,000 tons.

Continued in Part Two.

Sohrab Darabshaw contributes an Indian perspective to MetalMiner.

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