Aluminium rates slashed by Rs 5,000

Hindalco Industries Ltd, country's largest private aluminium producer, has reduced prices of its products by Rs 5,000 per tonne on all varieties with immediate effect.

Sources said that the state-owned National Aluminium Company (Nalco) was also considering similar reduction in prices.

Aluminium prices in the benchmark LME remained volatile despite strong fundamentals. Speculative buying pushed up prices but profit booking pulled it down. Overall, aluminium price on the LME witnessed a gain of $100 in the first two months of the year to close at $2,371.

Rising inventory was a major cause of worry for aluminium traders as mounting prices abstained traders from fresh booking for warehousing. The purchase gimmick in the international markets changed to need-based from interest-based. Hence, trade volume remained smooth throughout last month.

Total inventory this year rose to 7,69,475 tonne from 6,43,700 tonne in the beginning. To make the situation worse, warrants to LME registered warehouses perked up to 7,15,925 tonne on February 28 from 6,11,950 tonne on January 3.

Aluminium ingot in the domestic physical market slipped to Rs 12,700 per quintal on March 1 as compared to Rs 13,300 per quintal on February 15. Similarly, aluminium utensil scrap eased to Rs 9,900 per quintal from Rs 10,400 per quintal in the period under consideration.

According to a local trader "Market enthusiasm towards price outlook for aluminum is bullish. Inventories continue to grow rapidly. Therefore, LME price will be the casualty in the months ahead. The poor men's silver can face stiff competition from its substitutes like plastics".

Substitution with glass or plastics in beverage can sector and steel in automobile sector has already strengthened its position. But, further increase can not be denied, another trader said.

Total world aluminum inventories in January rose by 71,000 metric tonne to 3.263 million tonne, from a revised 3.192 million tonne in December, according to figures released by the International Aluminum Institute.