Hindalco Industries Limited expects its aluminium exports to rise in the coming months as geopolitical tensions in the Middle East, resulting in the closure of the Strait of Hormuz, disrupt regional supply.

Managing Director Satish Pai said that the company plans to increase shipments to Japan, South Korea and Taiwan, leveraging supply gaps created by the ongoing conflict in the region. While Hindalco already exports to these markets, as noted by Pai, “the macro situation is West Asia has given us headroom to export more to these regions.”  

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At present, the company exports around 25 per cent of its total aluminium output of approximately 1.3 million tonnes annually. The six countries of the Gulf Cooperation Council (GCC), with a combined capacity of 6.5 million tonnes, account for over 8 per cent of global primary aluminium production. As the region exports 5 to 5.5 million tonnes of its produced aluminium, it indicates the impact of ongoing geopolitical disruptions at a primary supply base on the global market at large.

Aluminium prices have improved amid supply constraints at the Strait of Hormuz, surpassing USD 3,500 per tonne recently, with the current quarter average at about USD 3,170 per tonne, compared to USD 2,830 per tonne in the previous quarter. The upward trend of prices is expected to support Hindalco’s earnings outlook.

"With aluminium prices in the range of USD 3,400-USD 3,500, we are very well-placed," Pai mentioned.

Hindalco denies the extruded aluminium production halt

On March 16, Hindalco clarified that its Aluminium Extrusions business continues to operate normally, dismissing reports of a production halt due to gas shortages.

Accounting for approximately 90,000 tonnes per year, the extrusions segment takes up a relatively small portion of Hindalco’s annual aluminium production, with any potential impact estimated at less than 0.1 per cent of overall operations.

Pai noted that the production remains “completely unhampered” as most of the company’s extrusion furnaces are dual-fired, allowing it to adopt fuel alternatives such as furnace oil.

With strengthened prices and shifting trade flows, Hindalco has the vantage point to capitalise on export opportunities, especially in Asian markets, as well as maintain stable domestic operations.

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