02 JULY 2013The Economic Times
Aluminium companies to gain from bauxite price dip on Chinese slump
Edited by : AL CIRCLE
2 min read
Aluminium companies are likely to get a breather in the form of falling bauxite prices driven by the demand slump from China, says experts.
Bauxite is usually exported from Gujarat to West Asia and China. However, recent slowdown in China and falling metal prices including aluminium, has led to a fall in imports from the major consumer, China. “We came to know that exports of bauxite from Gujarat has stopped in recent months as Chinese importers are cancelling their orders. This will help the domestic producers with cheaper bauxite ore,” a top official of Vedanta Aluminium told PTI.
He also said due to Chinese buying of bauxite in higher prices from the country, the raw material prices have not dipped despite falling aluminium prices.
Chinese import of bauxite from the country stands at around 5 lakh tonne a month with an average price of USD 45-50 per tonne.
Despite fall in aluminium prices to around USD1,720 a ton from the high level of USD 2,400 a ton seen in 2008-09, bauxite prices have not dipped due to building up inventory by China to feed its aluminium units. On this, an analyst from a brokerage firm said falling Chinese demand will help aluminium producers like Vedanta and Hindalco, even to some extent the state-run Nalco.
“Falling raw material prices will translate into lesser cost of production. And less manufacturing cost will help domestic producers in an environment when the prices of the metal is subdued in the international market,” he said. However, secretary general of Federation of Indian Mineral Industries (FIMI) RK Sharma said exports have stopped due to imposition of export duty of 10 per cent on the bauxite ore.
“When international prices are subdued for the metal, export duty of 10 per cent make domestic raw material uncompetitive in international market, affecting exports from the country,” Sharma said.
Bauxite is usually exported from Gujarat to West Asia and China. However, recent slowdown in China and falling metal prices including aluminium, has led to a fall in imports from the major consumer, China. “We came to know that exports of bauxite from Gujarat has stopped in recent months as Chinese importers are cancelling their orders. This will help the domestic producers with cheaper bauxite ore,” a top official of Vedanta Aluminium told PTI.
He also said due to Chinese buying of bauxite in higher prices from the country, the raw material prices have not dipped despite falling aluminium prices.
Chinese import of bauxite from the country stands at around 5 lakh tonne a month with an average price of USD 45-50 per tonne.
Despite fall in aluminium prices to around USD1,720 a ton from the high level of USD 2,400 a ton seen in 2008-09, bauxite prices have not dipped due to building up inventory by China to feed its aluminium units. On this, an analyst from a brokerage firm said falling Chinese demand will help aluminium producers like Vedanta and Hindalco, even to some extent the state-run Nalco.
“Falling raw material prices will translate into lesser cost of production. And less manufacturing cost will help domestic producers in an environment when the prices of the metal is subdued in the international market,” he said. However, secretary general of Federation of Indian Mineral Industries (FIMI) RK Sharma said exports have stopped due to imposition of export duty of 10 per cent on the bauxite ore.
“When international prices are subdued for the metal, export duty of 10 per cent make domestic raw material uncompetitive in international market, affecting exports from the country,” Sharma said.
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