NALCO, Hindalco, Vedanta Aluminium shares surge up to 8.8% as Alunorte refinery cuts alumina output by 50%

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Shares of aluminium companies NALCO, Hindalco Industries and Vedanta Aluminium Metal surged on Wednesday, August 12, after Norsk Hydro ASA reported that its Alunorte alumina refinery in Brazil had reduced production to 50 per cent of capacity due to a shortage of natural gas.

The production cut has pushed aluminium prices to a seven-week high. On the London Metal Exchange (LME), spot aluminium prices are currently around USD 3,373 per tonne, compared with an average of USD 3,565 a tonne in Q1 FY27.

NALCO shares surged around 8.8 per cent to INR 422.20 apiece in early trade, while Hindalco jumped around 3.7 per cent to INR 1,087.95 on the NSE. Vedanta Aluminium Metal shares were also trading higher, with the stock advancing 2.9 per cent to INR 476.95 on the NSE.

Alunorte cuts output as gas supplies tighten

Alunorte, located in the northern Brazilian state of Pará, has an alumina production capacity of 6.3 million tonnes a year. Approximately two tonnes of alumina, which is refined from bauxite, are required to produce one tonne of aluminium metal.

Norsk Hydro ASA reported that it had introduced contingency measures after its gas supplier, CELBA, informed the company of disruptions to gas availability.

“Measures include purchasing spot gas volumes, requesting direct access to the Barcarena LNG receiving and regasification terminal, and temporarily reducing alumina production to 50 per cent,” the Norwegian company said in a statement.

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According to a report by Kitco Metals, Hydro estimates that the financial impact in the third quarter from lower production and buying gas at prices above the contracted rate could be around USD 75 million to USD 100 million.

The company said Alunorte will start ramping up production to full capacity once gas availability normalises.

Alumina supply squeeze puts prices in focus

Alumina prices are now at 10 per cent of aluminium prices, compared with the average of 14 per cent to 16 per cent.

The global alumina market is estimated to be in a 1.6 MT surplus in 2026 and a 0.5 MT surplus in 2027. Against this backdrop, the reduction in Alunorte's capacity could support alumina prices.

Higher alumina prices could benefit companies such as NALCO, with alumina contributing 27 per cent of its FY2026 EBIT and 44 per cent in FY2025.

Antique has recently maintained its “buy” recommendation on NALCO with a price target of INR 463. It said firm aluminium prices and additional alumina volumes would support the company's topline.

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