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September 24, 2001 Aluminium Sector Update – September 2001 Aluminium production witnesses a slowdown… Aluminium production dipped by 5.6% during July 2001 as compared to the same period last year. However, as compared to the previous month, production rose by 4% in July 2001. During April-July 2001, aluminium production fell by 8.8% as against an 8.1% growth in the same period of the previous year. Table 1: Production (in tonnes) (tonnes) Production Jul-01 Jul-00 % Change Apr-Jul 2001 Apr-Jul 2000 % Change Aluminium 52239 55367 (5.6) 195226 214108 (8.8) Source: Industry Chart 1: Aluminium Production Source: Industry Aluminium prices dip… Following the international trend, domestic prices of aluminium fell during August. In the Mumbai market, aluminium ingot was sold at Rs 93/kg in August, the lowest price since December 2000. Prices of aluminium ingot have slid between May and August 2001. Yet the average price of aluminium ingots between April and August 2001 was 3.5% higher than the average price in the same period last year.  Chart 2: Aluminium Prices (Ingot prices in Mumbai market) (Rs /quintal) Source: Industry Chart 3: LME prices and inventory Source: Industry Major news Madras Aluminium Company has reported a net profit of Rs277mn for the year ended June 30, 2001. This translates to a decline of 9% as compared to the profit of Rs304mn in the previous year. Utkal Alumina International Ltd has recast the investment strategy for its 100% export-oriented greenfield alumina refinery project in Orissa. It now plans to set up the refinery with an annual production capacity of 3 million tonnes of alumina as against its original plan of 1 million tonne. All the existing promoters of the company Indal, Alcan and Hydro Aluminium have agreed to enhance the size of the project in anticipation that there will be a great demand for alumina within the country and abroad. Nalco has recorded a decline in its total sales turnover during the first five months of the current financial year at Rs 9493mn as against the target of Rs 9612mn. The Government is considering the option of buyback of shares of Nalco. Nalco has awarded its 25,000 tonne alumina tender to a Swiss trader. Domestic secondary aluminium manufacturers are reeling under the burden of the increased import duty from 10% to 25% imposed recently. Worldwide aluminium inventories rose in July as compared with the previous month and July 2000. Stocks of unwrought metal totaled 1.79m tonnes in July as against 1.73m tonnes in June and 1.75m tonnes in July 2000. China’s imports of alumina are seen reaching above 2.5 million tonnes by the end of September, from 1.58 million tonnes in January-June. Dan Metals of Germany has expressed interest to bid for the sick Pennar Aluminium Company (Palco). Chinese Aluminium has gained popularity in the South East Asian market, taking market share from India, which has reduced exports of the metal due to healthy domestic demand.   Sangeetha Subramanian

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