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April 14,
2001
Aluminium Sector Update – April
2001
Aluminium production
slowing down…
The growth in aluminium
production slowed down to 0.8% in February 2001 as against a growth
of 11.6% in February 2000. The cumulative production growth during
April-February 2001 stood at 5.3% compared to 14.5% in the
corresponding period last year. The main reason for slowing down of
aluminium production growth is the decrease in demand from the
automobile industry.
Table 1: Production (in
tonnes)
| Production |
Feb-01
|
Feb-00
|
% Change |
Apr-Feb 2001 |
Apr-Feb 2000 |
% Change |
| Aluminium |
51395
|
50993
|
0.8
|
593373
|
563364
|
5.3
|
Source: Industry
Chart 1: Aluminium
Production
Source: Industry
Aluminium prices
remain firm…
Aluminium ingot prices
in the Mumbai market exhibited firm trends. During March 2001, the
average price of ingots in the Mumbai market was Rs 9432/quintal
which is a little lower than the average of the preceding month.
However, it is 5.4% higher than the average of March 2000. The
average price of ingots during 2000-2001 was 7.2% more than the
corresponding period last year. The average LME price during the
period April 2000 to February 2001 was 4.9% higher than in the same
period in the previous year.
Chart 2: Aluminium
Prices (Ingot prices in Mumbai market) (Rs /quintal)
Source: Industry
Chart 3: LME prices
and inventory
Source: Industry
Slowdown in US
likely to hit Indian aluminium exports
Following a fall in the
consumption of aluminium in the US, Indian aluminium exports have
come down marginally in the past few months. Hindalco and Nalco
have a sizeable presence in the export market. Hindalco’s
exports are close to 42,000 tonnes while Nalco exports about 50% of
its production. Nalco’s direct shipments to the US, which are
at 12,000 tonnes has now dropped to around 10,000
tonnes.
Major news
Indian
-
Hindalco Industries has
decided to put the brakes on its Rs 1bn aluminium die-cast wheels
and Rs 2.5bn cans business. It would focus on its Rs 18bn
brownfield expansion at Renukoot in Uttar Pradesh.
-
Hindalco is all set to
enter the retail market by launching kitchen foils, its first FMCG
product. The company already has a foil division and is planning to
set up an extensive distribution network across the country to
bring in a host of foil based products under the brand name of
Hindalco.
-
Nalco has produced a
record 230,516 tonnes of aluminium in the financial year 2000-2001
as compared to 212,633 tonnes in the corresponding period last
year.
-
Nalco has increased its
aluminium wire rod prices by Rs1,000 with effect from April 1,
2001.
-
Indal is planning to
buy out co-promoter Reddy’s 26% stake in Annnapurna Foils
(AFL).
International
-
The Asian aluminium
markets is expected to see a supply surplus of good-Western
aluminium in April-June since the region’s major aluminium
buyers Japan, Taiwan and South Korea have reduced their bookings
under long term contacts for shipment in the quarter.
-
Century Aluminum
Company would offer up to $315,000,000 of senior secured first
mortgage notes due 2008 to certain institutional investors in an
offering exempt from the registration requirements of the
Securities Act of 1933.
-
Alcoa Inc and
Toronto-based Genstar Capital Corp. have signed a letter of intent
for Alcoa to acquire Gentek Holdings Inc. of Cleveland and its
Gentek Building Products subsidiaries.
-
Desperate to conserve
electricity, the Bonneville Power Administration has said that it
wants Northwest aluminum smelters closed for up to two years.
-
Alcoa Inc’s
first-quarter net earnings rose 16%, assisted by acquisitions, cost
cutting and electricity sales. Alcoa reported earnings of $404
million, or 46 cents a share diluted on increased shares, compared
with $347 million, or 47 cents a share, a year earlier.
-
Alcoa has completed the
sale of 50% of the Aluminium Oxide Stade GmbH alumina refinery
located in Stade, Germany to Dadco Alumina and Chemicals Ltd., a
private investment and trading company. Alcoa acquired the 50%
share of Stade as part of its acquisition of Reynolds Metals
Company in May 2000. VAW AG of Germany owns the remaining
interest.
-
The rankings of the
global mining industry have been shaken up by the US$28 billion
merger between Australia's BHP and London-listed Billiton. The new
entity to be called BHP Billiton would become the world's
second-biggest mineral and metals producer, after Alcoa of the
United States.
-
Alcoa Inc is planning
to extend and add to production cutbacks at its Ferndale, Wash.
smelter for another five months and sell back high-priced
electricity to the power-desperate U.S. West.
-
Primary aluminium
producers have a favourable medium-term credit outlook, mainly due
to their globally competitive cost structure, comfortable LME price
expectations and expected demand growth in the domestic
market.
Sangeetha
Subramanian
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