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May 12,
2001
Aluminium Sector Update – May
2001
Aluminium production
dips…
Aluminium production decreased
significantly by 13.3% in March 2001 as compared to 11% growth in
the corresponding period last year. The cumulative production
growth during 2000-2001 was just 3.5% as against 14.2% in
1999-2000. 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 |
Mar-01
|
Mar-00
|
%
Change
|
Apr-Mar
2001
|
Apr-Mar
2000
|
%
Change
|
| (tonnes) |
| Aluminium |
49811
|
57481
|
(13.3)
|
642447
|
620845
|
3.5
|
Source: Industry
Chart 1: Aluminium
Production
Source: Industry
Aluminium prices remain
stable
Aluminium ingot prices in the Mumbai
market continued to remain firm after recording an increase of 7.2%
during 2000-2001. Average aluminium ingot prices stood at Rs
9,605/quintal in April 2001 which is 6.9% higher than the average
price of Rs 8,985 in April 2000. Domestic aluminium companies are
likely to hike the prices of its products by about Rs 500/tonne,
following a $50 per tonne increase in the global prices.
Chart 2: Aluminium Prices (Ingot
prices in Mumbai market) (Rs /quintal)
Source: Industry
Chart 3: LME prices and
inventory
Source: Industry
Company-wise aluminium output in
FY01 up…
Despite recent production losses at Balco, total aluminium
production in the country increased in FY01. Total output rose to
642,844 tonnes in FY01 as compared to 618,682 last year. Hindalco
was the major contributor, producing 250,897 tonnes against 250,792
tonnes and Nalco at 230,517 tonnes against 212,663 tonnes. Indal
reported a production of 43,760 tonnes in FY01 as compared to
43,190 tonnes in FY00 whereas Malco’s output increased to
29,000 tonnes from 17,704 tonnes. Due to the strike at Balco
following the sale of the smelter to Sterlite, the production fell
to 86,670 tonnes in FY01 as against 94,333 tonnes last
year.
A look at the FY01
Results
- The net profit of Hindalco
witnessed a growth of 10.7% in FY2001 to Rs 6781mn as compared to
Rs 6124.1mn in the corresponding period last year. Net sales
increased by 12% to Rs 22754mn as against Rs 20312mn in the same
period last year. The increase in net sales and exports is
attributed to better realization, improved product mix and increase
in sales volume.
- Indal registered a net profit
growth of 38% in FY2001at Rs 1160.1mn as against Rs 839.4mn in the
corresponding period last year. The excellent performance in terms
of topline as well as bottomline can be attributed to better
capacity utilization, enriched product mix, thrust on exports,
improved operating efficiencies and significant reduction in
working capital.
- For FY01, Nalco has reported a
growth of 28% in the net profit to Rs 6535.6mn as against Rs
5115.3mn in the corresponding period last year.
Major
news
Indian
- Indian Aluminium is planning to
raise Rs 1bn in a convertible eurobond issue during the current
year to finance its expansion project. The modernization and
up-gradation of the Taloja sheet plant to meet international
quality standards helped Indal improve market share in the sheet
business and post a record 22% growth in sales. The extrusions
business recorded a turnaround with sales and production crossing
7,000 tonnes.
- Nalco is in talks with players in
the Gulf for setting up a joint venture abroad. Nalco has hiked its
aluminium wire rod prices by Rs 1000 with effect from April 1,
2001. Meanwhile, the Department of Disinvestment is planning to
take up disinvestment of the Government’s stake in Nalco, the
last remaining public sector unit in the aluminium sector in the
year 2001. The application filed by NALCO to the Department of
Company Affairs, Government of India for amalgamation of
International Aluminium Products Ltd. (IAPL) with NALCO is under
their active consideration.
- Hindalco’s Rs 18000mn
brownfield expansion programme is progressing as per schedule. The
company has taken up profit improvement initiatives called Project
"Rocket –2K" which would increase thruput, cut down costs,
improve operating efficiency and reduce working capital cycle. An
integrated IT solution is being evaluated to integrate operations
across various locations, ensure real time data availability,
enable improved and faster decision making, introduce Supply Chain
Management and CRM and make the company e- enabled.
- The Supreme Court has asked the
striking workers at Balco if they were ready to join work on
payment of 2 months advance salary. Since the workers have
indicated their willingness to reciprocate, it is likely that the
dispute would be resolved soon.
International
- Hundreds of aluminum workers
rallied Friday at Bonneville Power Administration headquarters in
Portland, urging the federal agency to sell smelters enough cheap
electricity to restart.
- China's state-owned Aluminium
Corporation of China (Chinalco) and Aluminium Corp of America
(Alcoa) are again discussing the possibility of Alcoa taking a
strategic stake in the Chinese enterprise.
- Alcan Aluminum Corp., a subsidiary
of Canada's Alcan Aluminum Ltd has reduced its posted U.S.
transaction prices for May by one cent a lb from April. Alcan
lowered the price for 99.7 percent remelt ingot to 76 cents a lb
and 6063 extrusion billet to 86 cents a lb.
- Alcan Inc. sees the power shortage
in the U.S. northwest as welcome news for slumping aluminum
markets, especially since it does not have a smelter in the
region.
- A multi-billion dollar lawsuit over
shareholder control is threatening to undermine the operations of
the world's second-largest aluminium producer, Russian Aluminium,
just weeks after the government approved the company’s
formation.
- Hydro Aluminum Metal Products NA, a
division of Norsk Hydro , is ramping up production at its new
Henderson, Kentucky, remelt plant, where it makes primary-quality
billet in an energy-efficient process.
Sangeetha
Subramanian
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