Aluminium prices to rise next year on China boost, observes Hindalco

With China, the world’s largest consumer of major commodities including aluminium, unveiling stimulus, prices of aluminium are slated to rise next year, says Hindalco Industries Ltd, India’s second biggest aluminium producing company.

Satish Pai, Hindalco’s deputy managing director said in an interview last week that after a dismal first half of 2015 and most likely the next two quarters of the fiscal also, prices of aluminium will finally rebound next year as China gears up to boost its slowing economy.

He said prices may climb to as much as $1,900 a tonne next year. The light metal has plummeted 23% in the past one year, depressed by a huge surplus in the global market and a below than average demand. Aluminium for delivery in three months was at $1,615 a tonne, up 0.4%, as of 3:08pm on Monday September 7 in Mumbai.

According to UC Rusal, the world’s biggest aluminium producer, global aluminium market will return to a deficit boosting prices to a large extent. A number of Chinese aluminium smelters have already announced their plans to cap their output quantity in an effort to rein in excess supply. Analysts from banks such as Standard Chartered Plc, however, lowered the price forecasts.

Mr Pai is optimistic about India’s demand for aluminium. He says demand will stay buoyant supported by the rising investments in power infrastructure and transport sectors. According to him, consumption may increase to 3.57 million tonnes by the year ending 31 March 2018 from about 3 million tonnes this year.

“This is a conservative estimate,” he said. “If all the investments promised by the government materialize, then this number could be much higher.”