
Indian ratings agency ICRA said today it maintains not too ambitious outlook for aluminium, at least, in the short term as prices are expected to reflect a range-bound movement hovering around their current levels.
Aluminium has been witnessing record low levels in the second half of the last fiscal. It's only very recently that the international prices of the light metal have shown some signs of strengthening. Aluminium prices quoted at London Metal Exchange (LME) have strengthened by around 15 per cent from their respective lows, stated ICRA in a statement.
{alcircleadd}Globally non-ferrous metals markets have remained in deficits in FY2015-16, said ICRA Ratings Senior VP Jayanta Roy. "Although consumption growth of non-ferrous metals in the global market remained muted, there has been greater producer discipline internationally, leading to the continuing deficits in base metals, supporting their prices," he added.

Source: London Metal Exchange
ICRA estimates that average global capacity utilisation of aluminium producers at present would be at around 80 per cent. Hence, any uptick in prices from the current levels would incentivise manufacturers to increase production, resulting in the markets turning into a surplus from the current deficits, the statement said. Such frequent swings in demand-supply scenario would keep prices of the metals in international markets range bound near their current levels.
In India,specifically, apparent growth in consumption for aluminium remained healthy in June quarter of 2016-17 fiscal 2017 at about 25 per cent on account of robust demand from the power transmission and distribution and automobile sectors.
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However, according to ICRA, the actual growth in consumption of aluminium is unlikely to sustain at the current level because there has been a significant build-up of aluminium inventory in the country in the last few months. As a result, apparent growth would slow down in the next few quarters, as this large inventory gets used up over time.
"Nevertheless, ICRA's outlook on long-term demand of base metals in India remains positive, driven by investments in infrastructure projects in power transmission and distribution sector, urban housing and smart city programmes," the statement added.
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