Continuous alumina price rise likely to boost NALCO’s FY18 net profit by 45%

The continuous price rise in alumina is expected to make a big difference to the FY 2018 net profit of National Aluminium Company Limited (NALCO). The leading Indian aluminium producer with integrated alumina operations expects the annual net profit to grow by 45 per cent, TK Chand, CMD of NALCO said in a recent interview.

NALCO’s EBITDA per tonne was at US$80-90 in Q1 FY18.

Source: Market Realist

NALCO’s current alumina capacity stands at 2.1 million tonnes and the last alumina shipment was valued at US$440 per tonne. The company registered total alumina sales of around 1.1-1.2 million tonne in Q1 FY18.

Input cost for alumina has also risen in Q2 of the current financial year. "In alumina, caustic soda constitute a major portion and there has been increase in the price of caustic soda, from INR 36,000 per tonne it has gone up to INR 40,700 per tonne and this has significant impact on production cost and that is also one of the factor which has pushed alumina prices," Chand added.

Alumina prices have risen by 10-11 per cent on a QoQ basis, as on September 2017. Bauxite supply shortage in the international market caused by the disruptions in Brazil in addition to supply cuts in China has led to this alumina price hike.

According to Chand, alumina is gradually moving towards a deficit situation globally. NALCO being a major producer and exporter of alumina stands to benefit from this price rise.