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09 SEPTEMBER 2022 AL CIRCLE

India's primary aluminium producers operating margins likely to contract by 400-500 basis points in Q2 FY23: ICRA

EDITED BY : RUPANKAR MAJUMDER 2MINS READ

On 8th September 2022, India's significant rating agency, ICRA, stated that the country's primary aluminium producers operating margins are likely to contract by 400-500 basis points (BPS) consecutively in the second quarter of 2022-23 on the aspect of high production cost.

India's primary aluminium producers operating margins likely to contract by 400-500 basis points

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ICRA Limited (formerly Investment Information and Credit Rating Agency of India Limited) was set up in 1991 by leading financial/investment institutions, commercial banks and financial services companies as an independent and professional investment Information and Credit Rating Agency.

ICRA said, "Owing to a twin onslaught of correction in aluminium prices and elevated input costs, the estimated operating profitability of ICRA's sample set of domestic players is likely to contract sequentially by almost 400-500 bps in Q2 FY2023 compared to Q1 FY2023."

The term basis points (BPS) refer to a standard unit of measure for interest rates and other percentages in finance. Basis points are used to show the change in the value or rate of a financial instrument.

The international price of aluminium has fallen by about 38 per cent from its record high of about 3900 USD per tonne in March.

Report on Future of Aluminium in Transporation Sector

During the first quarter of FY23, the average LME aluminium spot price was USD 2,870 per tonne. However, this has corrected to USD 2,425 per tonne for the second quarter.

As a result of the reduced coal linkage to non-power sectors and high dry fuel prices, the cost of power for domestic aluminium producers remained high.


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EDITED BY : RUPANKAR MAJUMDER 2MINS READ

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