HZL cuts tags, Nalco ups prices

Domestic base metal producers have revised their basic selling prices in line with international development.

Aluminium producers Hindalco and Nalco have raised their basic selling prices by 6 per cent or Rs 8,000-9000 a tonne across all varieties effective from today.

With the current revision, high grade aluminium would be priced at Rs 1,71,900 a tonne. Hindustan Zinc, on the other hand, has cut basic selling prices by about 5 per cent or Rs 8,400 per tonne effective from last Saturday. .

Attributing the current price spurt to the global markets, experts said that spot aluminium prices on the London Metal Exchange (LME) surged to $2,753.5 last Friday from $2,571 on April 13, when the local producers had last revised prices.

Domestically, the average price of aluminum has increased by Rs 35,000 a tonne since January 2006. Hindalco is planning a capex of Rs 400-500 crore for the current financial year to meet its business requirements.

The company will add another 81,000 tonne of aluminum capacity during the current year, taking its total capacity to 5,10,000 tonne a year.

The company expects its aluminum business to deliver strong performance based on its core strengths. It also expects international prices of the metal to remain steady, but adds that the near-term prices may remain volatile.

Falling LME inventory of 8,275 tonne in the last fortnight is also partly responsible for the price increase. Meanwhile, Hindustan Zinc, the largest zinc producer in the country, cut basic selling prices in line with falling zinc prices in the international market.

Fundamentals, however, still remain strong for the base metals, especially for zinc, with the recent forecast by the International Lead and Zinc Study Group stating that zinc refined in the western market should see a "substantial" deficit of 4,37,000 tonne in 2006, due to high consumption in developing Asian countries such as India and China outpacing global mine output.

The group is forecasting 4.5 per cent increase in global mine output to 10.42 million tonne in 2006, which will not be able to meet the forecasted 4.8 per cent rise, or 11.19 million tonne, consumption of the metal.

Growth in demand is forecasted to be strongest in India, where usage is expected to rise 9.1 per cent this year. The group also forecasts Chinese net imports of zinc to rise to 2,85,000 tonne this year.

High grade zinc prices were ruling at Rs 1,40,400 a tonne and Rs 1,07,300 a tonne on April 1 and January 1 respectively.