A strained global aluminium market could push prices sharply higher over the next year, even as alumina remains weighed down by surplus supply, believes the leadership of National Aluminium Company (NALCO).
Image source: NALCO
Brijendra Pratap Singh, Chairman and Managing Director of the state-owned producer, believes aluminium could trade close to the USD 3000 per tonne mark in the next financial year, underpinned by steadily rising consumption and structural limits on output. He has also added that demand is accelerating well beyond traditional end users, with electric vehicles, infrastructure projects, power transmission and large-scale data centres, all adding to the call on metal.
The supply picture, however, is far less flexible. Singh pointed to the risk of smelter closures in countries such as Mozambique, Iceland and Australia, alongside China’s self-imposed production ceiling of 45 million tonnes. With demand continuing to climb, he expects the market to tip into a deficit in 2026 and 2027. Reflecting this shift, NALCO has lifted its medium-term aluminium price assumption for 2026 to a range of USD 2900 to USD 3000 per tonne, from an earlier estimate of USD 2670.
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The premise for alumina tells a very different story. Prices have slipped to roughly USD310–USD320 per tonne and, in Singh’s view, are unlikely to move far beyond USD320–USD330 next year. New refinery capacity coming on stream in Indonesia and India has added to global supply, while lower operating rates at smelters have reduced demand. The result, he said, is a persistent glut that continues to cap prices.
NALCO has chosen not to hedge its aluminium output, preferring to remain fully exposed to any upside in prices. Hedging in alumina, however, could be considered if prices approach the USD 350 per tonne level. Meanwhile, management is concentrating on cost discipline to protect profitability.
A key focus is energy security. The company plans to lift coal production from its captive Utkal D and E blocks to 4 million tonnes this year. Captive coal is significantly cheaper than market purchases, delivering savings of INR 200–INR 300 (USD 2.40–3.60) per tonne and annual cost reductions estimated at INR 100– INR 150 crore ( USD 12–18 million).
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NALCO is also seeking to streamline its workforce, with a target to bring employee costs down from 16 per cent of total expenditure to around 10–12 per cent over the next three to four years through retirements, limited recruitment and outsourcing of non-core activities.
Operating margins are expected to remain broadly stable in the current quarter at around 44 to 45 per cent. Singh cautioned, however, that margins in the final quarter of the financial year could soften to 42 to 43 per cent as input costs, including caustic soda and calcined petroleum coke, edge higher.
On the growth front, NALCO’s expansion programme is progressing largely as planned. The company’s one-million-tonne-per-annum alumina refinery expansion is about 85 per cent complete and scheduled for commissioning in June 2026. This is expected to add between 400,000 and 500,000 tonnes of output in the following financial year.
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Capital expenditure is projected at roughly INR 1,700 crore ( USD 205 million) across the current and next year, rising to INR 2500– INR 3,000 crore ( USD 300–360 million) thereafter as work begins on a new smelter and associated power facilities.
Singh also dismissed speculation around divestment, reaffirming NALCO’s status as a long-term public sector enterprise. Dividend payments, he said, will continue even as capital spending increases, supported by improving revenues. NALCO currently commands a market capitalisation of INR 53,390.89 crore (USD 6.43 billion), with its shares having risen more than 34 per cent over the past year.
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