Nalco To Find Haven In Value-Added Products As Aluminium Prices Level Off

Nalco To Find Haven In Value-Added Products As Aluminium Prices Level Off

Thanks in part to rising production costs and shrinking prices at the LME, Indian aluminium manufacturers are working towards increasing value-added offerings to their product line ups.

Though sanctions boosted raw aluminium prices to multi-year highs a year ago, prices have since fallen back to Earth after the sanctions were lifted in January. Additionally, the removal of sanctions acted in concert with recoveries at Alunorte and Alcoa’s Australian aluminium works to stabilize the alumina market and eliminate supply worries.

Tapan Kumar Chand, Nalco’s managing director and chair, told domestic media he expects prices at the LME to settle at around US$1,800 to US$2,000 per metric ton over the course of the current fiscal year. Meanwhile, the World Bank projects a drop of 8 percent at the LME through the end of the calendar year.

“The (aluminium) prices will still be a pressure point for the domestic producers. Due to high energy costs, our production costs are climbing,” Chand explained. “Producers now need to move up the value chain with thrust on medium to high value added products. Unless they get higher realizations, it will be difficult for them to survive. A lot of efforts are being made by Nalco, Hindalco, BALCO and Vedanta towards this end.”

He continued by predicting a rise in value-added demand from the government’s renewed focus upon infrastructure improvement, electric vehicles, and high-speed trains. As a result of expected demand, Nalco has established a joint venture with India’s defense PSU Mishra Dhatu Nigam Ltd (MIDHANI) to produce specialty aluminium alloys.

“Our JV with MIDHANI will be named Special Aluminium Company,” said Chand. “It has got the seal of approval from NITI Aayog. We are going for financial closure of this company. Funds will be raised through a mix of debt and equity in the ratio of 70:30. Also, we are going for a technology partner who can acquire up to 10 per cent stake in the joint venture.”