Indian aluminium producers expected to reap benefits from the US sanctions against Rusal

According to the Quint report, Indian aluminium producers, especially the integrated ones having presence right from raw material to final product like Hindalco and Nalco are likely to be benefitted on the US sanctions against twelve Russian companies including billionaire Oleg Deripaska-led Rusal, said Gautam Chakraborty, analyst-institutional research at brokerage Emkay Global Financial Services.

The sanctions against Rusal followed by the ban of Russian aluminium prices on the London Metal Exchange has resulted in inevitable price jump by 8 per cent in the last two days, primarily because Rusal accounted for 13 per cent of the global output outside China and recorded to produce 3.71 million tonnes of primary aluminium in 2017 and also earned about 14 per cent of revenue from the export to US, as per a report.

Also, according to a report from BloombergQuint, Mr. Anil Agarwal, chairman of Vedanta Aluminium Ltd. estimates that the aluminium prices can rise up to 50 per cent, ranging between US$2500 and US$3000 per tonne, against the current minimum average US$2000 to US$2200, if sanctions on Rusal continue.

However, apart from the US sanctions against Rusal, a partial shutdown at Alunorte refinery resulting in 26 per cent price rise of alumina in the past one month is also a reason for aluminium price hike.

Nonetheless, this is going to benefit Indian integrated aluminium producers like Hindalco and Nalco, said a brokerage, who also expects aluminium to have the best demand outlook among base metals, while Nalco’s earnings to benefit the most.

In an earlier interview with BloombergQuint, the state-run company reported that at every US$10 rise in alumina prices it witnessed EBITDA boost by INR 85 crore.