See metal prices around $2,600-2,800 by June: Ess Dee

Sudip Dutta, CMD, Ess Dee Aluminium sees prices between USD 2,600-2,800 levels by end of June or July first week.

Excerpts from CNBC-TV18's exclusive interview with Sudip Dutta:

Q: How are aluminium contracts moving for you? Your next time for contracting will be June. Do you expect prices to jump up significantly?

A: We do not expect that because in December-January, metal prices were USD 2,400 and prices were booked up to March.

Q: The December-January numbers for purchase of aluminium were at USD 2,400 per tonne. How do you expect it will shape up in June?

A: In June it should be between USD 2,600-2,800 levels. Garmco has given this expectation and we are talking to some research companies. With that the metal prices should be between USD 2,600-2,800 levels by end of June or July first week.

Q: If Garmco were to hike its prices in the contracts going forward. Do you have any price escalation clauses with your current clients?

A: No we don’t have price escalation clauses.

Q: So it would definitely impact your margins going forward considering the June quarter may see a rise?

A: It should be in an intact manner and our main product is going into the pharmaceutical companies. We are not acting as a commodity market, because we are manufacturing the foil and not the metal. The cost of the pharmaceutical company in the packaging division is only 5%. If I increase the prices by Rs 20-30, it only inches to 5.01-5.12 level; it’s not a big hike for the pharmaceutical company.

Q: As you say that the raw material aluminium will get expensive by the time you contract it again in June. Would you be able to pass on the price hike or will you have to take a margin hit?

A: We just pass on the metal prices to the customer.