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India's NALCO sees aluminium prices rising

Le 17 août 2015, 12:03 dans Humeurs 0

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Aluminium prices set to reach $2,000/tonne by Dec* Rising prices set to boost operating marginsKOLKATA, India, Aug 5 (Reuters) - India's state-run National Aluminium Co Ltd (NALCO)expects aluminium prices to reach $2,000 a tonne by December on rising demand, boosting its operating margins, its chairman said on Wednesday.

Aluminium prices, which fell by more than half to a low of around $1,300 a tonne earlier this year from a peak in 2008 as the economic slowdown cut into demand from auto and construction sector, is recovering helped by output cuts and reviving demand."Already we are having an improving trend. Yesterday it touched $1,900 per tonne, so it should go up," NALCO's chairman, C.R. Pradhan, told Reuters.The rise in prices should also boost operating margins to between $500 and $600 a tonne by December from $100 a tonne in the first quarter, he said.

By December, the firm's output will rise to 410,000 tonnes from 345,000 tonnes in the first quarter, he said.The company's wage bill is also set to rise by 5-7 percent after it increases wages by December, Pradhan said.Shares in the company, which the market values at $4.5 billion, has risen 71 percent so far in 2009, compared with a 65 percent rise in the benchmark index.NALCO shares ended 2 percent lower at 325.60 rupees in a Mumbai market that rose 0.5 percent. 

 

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Hindalco: Recovery in demand can redeem profits

Le 4 août 2015, 11:51 dans Humeurs 0

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Lower sales realisation and higher operating expenses hurt the profitability of Hindalco Industries, the aluminium and copper major, in the  September quarter. Despite strong volume growth and lower cost of production, the company’s quarterly net profit more than halved on a year-on-year (y-o-y) basis. The net profit at Rs 344 crore is below expectations; the revenue figures beat expectations though. Hindalco’s aluminium business has performed better than its peers such as National Aluminium Company (Nalco) and Sterlite Industries. Hindalco is the lowest-cost producer of aluminium in the country. However, Hindalco, by its own standard, failed to report a good set of profit numbers. For instance, its operating profit (profit before interest and tax) margin, in the aluminium business, at 15.6%, is the highest among its peers, but is almost half of what it was in the June 2009 quarter.

This happened despite a 15% sequential rise in London Metal Exchange aluminium prices. Somehow, the company couldn’t manage its operating expenses in the aluminium business very well. The copper business, however, seems to have performed in line with expectations. Despite a sharp fall in by-products realisation, mainly sulphuric acid prices, the operating profit grew by more than half, on a y-o-y basis.

The excellent performance in the copper business would not have been possible had the company not lowered the cash cost of production by one-third and sold 15% more than what it did in the September 2008 quarter. Going forward, the management of Hindalco has hinted that aluminium prices may not rise significantly from current levels. The treatment and refining charges (TC/RC) are also unlikely to gain any further strength. Hindalco is a standalone copper smelter and gets its share of profit in copper business from TC/RC margins. Therefore, it is less likely that Hindalco’s absolute profit figures will rise significantly in the next two quarters unless there is sharp recovery in demand or drop in cost of production. Considering all these factors, the earnings per share (EPS), on a standalone basis, for financial year 2009-10 is expected to be Rs10-11. At the current price level, the stock trades at a forward price-earnings multiple of close to 12, which appears to be slightly expensive.

 

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Trimex International seeks damages from Vedanta Aluminium

Le 4 août 2015, 11:49 dans Humeurs 0

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Business Standard reported that Dubai based minerals trading company Trimex International EZE Limited moved the Supreme Court claiming USD 600,000 as damages from Vedanta Aluminium Limited a subsidiary of London Stock Exchange listed Vedanta Resources. In its petition,

Trimex sought appointment of the second arbitrator and the presiding arbitrator as per the clause in a contract entered between the 2 parties for supply of 45,000 tonnes of bauxite in September 2007.It further said that it had nominated a retired Karnataka High Court judge as the arbitrator from its side, a contention rejected by Vedanta on the ground that there was no concluded contract between the parties.A bench headed by Justice K G Balakrishnan has posted the matter for hearing on November 9th 2009. Earlier it had issued a notice to Vedanta.

Trimex said that Vedanta has to pay damages to the extent of USD 600,000 to the ship owners besides loss of profit incurred by it due to breach of the contract.According to the trading company, it had no alternative other than to claim damages for non performance of the contract which resulted in cancellation of 5 shipments of 45,000 tonnes of bauxite besides 10% which was confirmed by Vedanta through an email on October 16th 2007.However, Vedanta has denied all liabilities and also disputed the existence of the contract for supply of bauxite on the ground that the agreement between the parties was only at a draft stage and, as such, no concluded contract including the arbitration clause, had not come into existence.

 

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