India’s Domestic Aluminium Demand to Outpace GDP: Nalco’s Chand

India’s Domestic Aluminium Demand to Outpace GDP: Nalco’s Chand

In an interview with domestic media, the Chairman and Managing Director of India’s National Aluminium Company (NALCO) predicted that the company’s gains in the coming months and years are likely to come from the infrastructure, power transmission, and construction sectors.

Dr. Tapan Kumar Chand told the India Times that Nalco is preparing to boost output of bauxite ore, alumina, and aluminium over the course of the coming fiscal year.

“We have targeted a 10% increase in the smelter output at 0.44 million tonnes in 2017-18, compared with 0.38 mt in 2016-17,” said Chand. “It will amount to 96-97% of our smelter capacity of 0.46 mt. We are also looking at 100% capacity utilisation in bauxite mining at 6.82 mt and full capacity in alumina production of 2.1 mt.”

Chand continued by saying that the rising tide in the global aluminium market has done a great deal to rise Nalco’s boat.

“The aluminium business is looking up globally,” he said. “All variables in terms of volume and price seem to be in our favour. This is true not only for aluminium, but also for alumina. For the first time, in years, Nalco is also set to reap the benefits of an $80-90 per tonne spurt in alumina prices.”

In addition to the recovery of the global aluminium market, Chand said that cuts in the excessive production cascading out of the People’s Republic of China have improved Nalco’s fortunes as well.

“[The] price of aluminium has been on a steady rise from $1,700 per tonne in January to over $1,900 in April,” he related. “The Chinese impact is likely to keep the market moving. Metal prices are expected to remain range-bound between $1,850 and $1,950 per tonne in the coming months. The combined impact of a spurt in volume and prices in alumina and aluminium will have strong impact on our financials.”

Alumina’s price recovery has been a decisive factor to Nalco’s success as well, he said.

“Yes. Alumina is a strong armour for Nalco,” opined Chand. “We have seen prices which had earlier remained stuck at $250-255 per tonne, firming up to $340-350 per tonne. Nalco is the lowest cost producer and one of the largest alumina producers globally.”

Going forward, Chand expected strong growth in domestic demand, expecting it to out-pace even India’s already significant growth in GDP.

“Aluminium demand is projected to grow at a robust 8-9% this year, a step ahead of GDP growth rate of 7.5%,” opined Chand. “Demand is strong from automobile and transport sectors, particularly from lighter and more fuel-efficient cars and high-speed trains. Major demand is also seen coming from the thrust on infrastructure, construction and power sectors. Aluminium is perceived as an environment-friendly metal and hence, will be in demand in future.”