Aluminium on a swing

METALS UPDATE

Producers expect to end the fiscal with record profits.

Prices for aluminium at London Metal Exchange (LME), which averaged $2,028 per tonne in the last fiscal, climbed to $2,800 this month with the average pegged at $2,580. The prediction is it may cross $3,000 in December.

However, the climb has been accompanied by some volatility, and last month the LME price swung sharply with the trough going below $2,600 per tonne and the peak touching $2,800.

The buoyancy in the market is based on strong fundamentals, says C R Pradhan, chairman and managing director of Nalco. Demand for the metal is looking up in Europe, Latin America and Japan on increased activity in construction and the auto sector.

More importantly, there is interest among fund managers in aluminium who feel its potential is yet to be exploited, according to L N Patnaik of Reymount Commodities.

Besides, China has increased the export duty on aluminium from 5 per cent to 15 per cent from November. Though China is a net importer of the metal, the duty increase will discourage exports in the immediate future, contributing to consolidation of prices.

Meanwhile, Nalco's domestic aluminum price, indirectly linked to the LME, has undergone ups and downs though overall it has increased from Rs 1,15,000 per tonne in April to Rs 1,28,000 in November.

With its annualised demand growth hovering at 15 per cent, domestic aluminium prices are likely to remain robust in the near future, Pradhan says.