INSUBCONTINENT EXCLUSIVE:
ET Intelligence Group: Sanctions imposed by the Trump government on Russia’s largest and world’s second-largest aluminium producer RUSAL
will take away over 6 per cent of global supply, and 14 per cent outside China
Since this announcement, LME prices have gained 7 per cent to $2,140 a tonne
Indian aluminium companies such as Hindalco, Nalco and Vedanta will benefit from the higher prices due to the supply disruption if the
sanctions last.
The US has barred its companies from dealing with RUSAL and said that other countries transacting with it would also be
RUSAL’s biggest export markets are the US and the EU, which are also the biggest aluminium deficit markets with a reported deficit of 4.7
and 3.8 million tonnes, respectively.
India imported around 1.5 million tonnes of aluminium in 2017, mainly from China
Given the sanctions on RUSAL, China may find it more lucrative to target the Western markets for exports thereby reducing its exports to
India, giving a boost to domestic producers.
The sanctions may also impact RUSAL’s expansion plans at a time when new projects are hard to
Of the four major project ramp-ups globally, two are to be commissioned by RUSAL which now face uncertainty
China, which accounts for half of the world’s production and consumption, is going slow on capacity addition due to environmental issues
and will not have any new capacity after 2020.
Also, the global aluminium inventory is lowest in the past seven years
These factors together are expected to keep prices firm
This augurs well for the Indian aluminium producers
What will benefit Hindalco and Nalco more is that they are backward integrated, that is they can procure alumna, a major raw material, from
This makes them among the lowest-cost producers in the world
Prices of alumina have risen 22 per cent in the past month after a partial shutdown of Brazil’s Alunorte, the world’s largest alumina
refinery, contributing 5 per cent to global output
Vedanta is not fully backward integrated
On Tuesday, Hindalco, NALCO and Vedanta shares gained 4 per cent, 3 per cent and 1 per cent, respectively.
