Post News Network
Bhubaneswar, August 6: Though domestic demand for aluminium is not likely to be affected due to global commodity meltdown seen in recent months, exports of the metal is likely to suffer due to slack demand environment.
As per analysts, domestic demand environment is likely to improve in the next 2-3 years, which will help aluminium companies. However, export component will suffer on the back of slowdown in China.
“Those companies with higher exports will get lower realization for the commodity. So, earnings may dip from this account,” Senior Vice-President of ICRA, Jayanta Roy told Orissa Post.
Currently, aluminium prices at London Metal Exchange is hovering around $1600 per tonne from a high of $1800 per tonne seen during last year. Prices have dipped on the back of slowdown in China, which is the largest consumer of most commodities in the world.
Major domestic firms like National Aluminium Company, Hindalco and Vedanta are into exports, which may be affected due to the current slowdown.
Roy also noted that impact on earnings will depend on the dependence on overseas market.
Interestingly, both Vedanta and Hindalco increased their focus on exports last fiscal due to subdued domestic demand. While around half of Hindalco’s produce were exported last fiscal, this was more than 30 per cent for Vedanta.
However, experts pointed out that the earnings from domestic market may compensate loss from overseas market.
