Alu­minium Get­ting Out of Step with Other Com­modi­ties’

Resource Digest - - CONTENT -

YOUR VIEWS ON THE ALU­MINIUM IN­DUS­TRY... The worst is yet to get over. Of the 60 mil­lion tonnes global pro­duc­tion, 30 mt are pro­duced in China. Chi­nese GDP growth is the low­est in the last sev­eral years and this is hav­ing a ma­jor im­pact on alu­minium prices like any other com­mod­ity. In such a case, only com­pa­nies with lower cost will ben­e­fit. Rus­sians gain as their costs are in rou­ble and earn­ings in dol­lars. WHEN DO YOU SEE THIS RE­VERS­ING? While lower GDP growth in China is a neg­a­tive for alu­minium, there are other pos­i­tives com­ing out. We be­lieve in 2016, glob­ally de­mand will out­strip the sup­ply. The sen­ti­ments are also strong at the mo­ment. What we are see­ing is that al­though there is a sell-off across com­modi­ties, alu­minium has held firm. In fact, it has moved up 3% since end of Novem­ber when the com­mod­ity in­dex has fallen 13%. It ap­pears to me that alu­minium is get­ting out of step and it is a pos­i­tive sign. CRU, a re­spected com­mod­ity watcher, is say­ing that in­ven­tory will change from 95 days at present to 72 days by 2020. This means de­mand is out­strip­ping sup­ply. All th­ese tend to sug­gest that alu­minium is get­ting out of step.

HOW IS HIN­DALCO NAV­I­GAT­ING THIS DIF­FI­CULT EN­VI­RON­MENT?

We would like to get more dol­lars per tonne of alu­minium. So, if I pro­duce more value-added prod­ucts, I get more dol­lars per tonne. That is why we have put up ca­pac­i­ties which are value-added prod­ucts that are im­ported to­day. Also, we are hedg­ing our alu­minium up­stream busi­ness, which is very vul­ner­a­ble to the LME (Lon­don Metal Ex­change) prices, with the value-added prod­ucts.

IS THERE ANY HOPE FOR A MIN­I­MUM IM­PORT PRICE FOR ALU­MINIUM?

Alu­minium is an im­por­tant sec­tor as it pro­vides huge em­ploy­ment. In In­dia, with sev­enth largest alu­minium re­serves, the in­dus­try can be a good sup­port to the `Make in In­dia' con­cept. It has the po­ten­tial of go­ing from 20 lakh tonne ca­pac­ity to 41

WE WOULD LIKE TO GET MORE DOL­LARS PER TONNE OF ALU­MINIUM. SO, IF I

PRO­DUCE MORE VALUE-ADDED PROD­UCTS, I GET MORE DOL­LARS PER TONNE. THAT IS WHY WE HAVE PUT UP CA­PAC­I­TIES WHICH ARE VALUE-ADDED PROD­UCTS THAT ARE IM­PORTED TO­DAY

lakh tonne ca­pac­ity.

The alu­minium as­so­ci­a­tion has made rep­re­sen­ta­tion to the right peo­ple and I am sure ap­pro­pri­ate ac­tion will be taken.

I have been told the debt of the in­dus­try is around ` 60,000 crore and there is a def­i­nite stress in the sys­tem. IS THERE ANY PLAN TO LIST US UNIT NOVELIS SEP­A­RATELY? No. There is no such plan at the mo­ment.

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