Nalco slashes prices

May 27, 2009: National Aluminium Company Ltd (Nalco) has cut prices of its products by up to Rs 5,000 a ton.

The step is aimed at discouraging imports from China, which got a boost after the domestic currency turned stronger against the dollar. "We have cut the prices of ingots and sow by Rs 5,000 a ton and other products like wire rods, billets by Rs 4,000 per ton to discourage imports from countries like China and Bahrain," Nalco director finance B.L. Bagra said.

"The step became imminent in view of threat of the largest exporters of the metal - China and the Gulf countries - pushing their products in the Indian market. In order to achieve parity with the prices of the imported metal products, we had to cut our prices," he added.

Aluminium ingots and sow will now cost about Rs 70,000 a ton in the local market and wire rods and billets would be priced at around Rs 78,000 to 79,000 a ton.

When asked if the price cut was a reflection of the gloomy global outlook at the London Metal Exchange, which has seen aluminium prices falling by about 70 percent in the last six months, Bagra said, "LME is the basis of pricing of any metal across the globe. But it had no major say in our price cut."

After breaching the 52-mark against the dollar in intraday during trade the last quarter, the rupee has appreciated to trade at 47 to a dollar.

Moreover, Bagra said the price correction should not be taken as a sign of a slump in domestic demand as the offtakes are expected to surge in the current fiscal, even though it is stable at present after an improvement in the last quarter. "Demand is stable at present. There was an improvement in demand in the previous quarter. Offtakes are expected to improve during this fiscal," he added.

The cable industry, the revival in sectors like housing, construction and automobiles will push for an improved demand for the metal in the domestic market this fiscal, he added.

According to the Centre for Monitoring Indian Economy (CMIE) India's aluminium production is expected to grow by 10.7 percent in 2009-10. "Aluminium production is expected to grow by 10.7 percent in FY10 on the back of the completion of various projects and healthy demand from the electrical power equipment and construction sectors," according to a CMIE report.

Source: The Economic Times