Aluminium prices to increase by 10% in 2-3 months- B L Bagra, Nalco

Aluminium prices may rise by up to 10% in 2-3 months to USD 2,000 per tonne due to subdued supply in the international market, Nalco Chairman B L Bagra said today.

"The price of Aluminium should recover from the present level of USD 1,850 a tonne. In the next 2-3 months, it should cross USD 2,000 per tonne," Bagra told PTI on the sidelines of a conference here.

Aluminium prices have remained subdued so far in this fiscal because of poor demand from all across the user sectors like transport, packaging and construction, which account for nearly 70% of the global 42 million tonne consumption of the metal.

Condensed margins have forced a lot of Aluminium capacity to put on hold as the price of the metal is on the wane while the raw material costs are on the rise, Bagra said.

"We were hoping the price of Aluminium should average between USD 2,100-2,200 per tonne in the current fiscal. But it is nowhere near there. For the last four months, the price is below USD 2000 a tonne.

"So, even to arrive at the targeted price, the price should be USD 2,300-2,400 for the rest of the period, which I don't foresee going to happen," he said.

Indian producers were so far able to offset the squeezed margin, partly by the depreciation of rupee, but the pressure is still there, Bagra said.

"The rupee has depreciated roughly by around 12%, while the price of Aluminium in the London Metal Exchange is down by more than 25%. So, there is still drop in the realization," he added.

Aditya Birla Group's flagship Hindalco is the largest domestic producer of Aluminium, with about 40% of the total 17.36 lakh tonne installed capacity. Sterlite has the second highest capacity and state-owned Nalco ranks third.

Bagra said, of late, Chinese and Australian governments are trying to support their companies with subsidies which are causing distortion in the international Aluminium market.