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Tight demand-supply situation, low global inventory to keep aluminium prices elevated: ICRA

11 Mar 2022 Evaluate

Rating agency ICRA in its latest report has said that a low inventory level of aluminium globally amid tight demand-supply situation in addition to any potential sanction on Russian aluminium exports are expected to aggravate the availability of the commodity in the rest of the world, and thereby keeping its prices at an elevated levels till normalcy is restored.

According to the report, Russia contributes almost 12 per cent to global trade in aluminium with exports primarily to Europe. Further, aluminium prices have touched an all-time high of $3,875 per tonne in the first week of March 2022 and currently at $3,320 per tonne, indicating severe tightness in the global supply. Another major factor contributing to the aluminium price rise is the elevated power prices in the European countries.

On impact on Indian aluminium producers, rating agency said domestic primary aluminium producers are better placed as their energy requirements are met primarily through coal-based captive power plants, and over 2/3rd of their overall coal requirement is met through captive mines/linkage coal from Coal India. Also, favourable aluminium prices would strengthen profitability of domestic players in FY23. It added that besides the favourable domestic demand, the export prospects too remain bright, given the global supply tightness.

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