Aluminium market may face deficit

London-based Natixis Commodity Markets has forecast that the global aluminium market, which is likely to be in a deficit of 50,000 tonnes in 2007, is expected to see a further shortage of 250,000. The deficit comes on the back of a strong demand from emerging markets such as China, India and Russia.

The strong demand from user industries has also resulted in aluminium inventories in Asia (including India) declining on a year-on-year basis.

In June 2007, aluminium inventories amounted to 354,000 tonnes compared with 386,000 tonnes a year earlier, according to London-based International Aluminium Institute. Average aluminium prices were $2,762 a tonne on the LME in the June 2007 quarter, a rise of 4.1 per cent y-o-y.

However, spot aluminium prices declined in the domestic market as the rupee gained nearly 7 per cent against the dollar in the past five months. Lower prices boosted demand for the metal among user industries. Among the domestic players, Hindalco's primary aluminium production was up 8.3 per cent y-o-y to 116,169 tonnes in the June 2007 quarter, helped by successful ramp-up of its phase-I project in Hirakud.

Meanwhile, Natixis Commodity Markets has projected an average annual price of the non-ferrous metal at $2,750 a tonne for 2007.