Aluminium major National Aluminium Company (NALCO) said it was concerned over the rising input costs like caustic soda even though firm LME (London Metal Exchange) prices were a positive for its operations.
“In NALCO, we are concerned on rising input cost and availability in respect of caustic soda, aluminium fluoride, coal tar pitch, CP (calcined petroleum) coke, etc and NALCO collective looks forward to operation and materials department to meet the challenge’’, said NALCO CMD T K Chand said at the company’s 36th annual general meeting (AGM) here.
The NALCO chief, however, was upbeat on price outlook for aluminium.
“After averaging USD 1,854/tonne in Q1 of 2017 and USD 1,917/tonne in Q2 2017, LME three-month price is forecast by leading commodities analyst CRU to average about USD 2,000/tonne during Q3 of 2017. Reports have indicated that 30 per cent of aluminium smelting capacity and 50 per cent of alumina refining capacity may be cut in Henan, Shandong and Shanxi provinces of China if environmental measures are introduced. If China were to curtail capacity, it is expected to be supportive of aluminium prices”, he said.
Chand attributed the strong outlook on aluminium prices to expectations of winter shutdowns and Chinese supply reform. Chand said, in the coming days, aluminium market is going to shine, the LME prices for aluminium has been continuously moving up from USD 1851 per tonne during Q1 2017 to around average USD 2081 tonne as of now in September 2017.
Both North America and Europe were facing short supply of aluminium and the estimated global production in third quarter of 2017 will be balancing with consumption. This coupled with increase in input cost are likely to hold the price but uncertainty still remains on account of China starting low cost smelters, surfacing of unreported inventory and buyers adopting wait and watch.
NALCO is developing a new business model to withstand tough market conditions and vagaries in aluminium prices. The navratna company aims to strengthen its business by leveraging its core competency in mining, metals and energy sectors, through modernization, Greenfield and Brownfield expansions, upstream and downstream integration. Besides, the model envisages diversification into green power, IPP, caustic soda, rare metal like titanium, recovery of iron from red mud waste and merchant mining that are immune to downturn in metal market.
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