Hoping for aluminium price rebound to stay: Nalco

In an interview with CNBC-TV18, TK Chand, CMD of Nalco, talked about prevailing aluminium and alumina prices and the outlook ahead.Below is the transcript of TK Chand’s interview to Sonia Shenoy and Anuj Singhal on CNBC-TV18.Sonia: Can you start off by telling us what the current price situation is, both in alumina and aluminium prices versus what we saw last quarter?A: Right now, aluminium is hovering around USD 1,620-1,650 per tonne range. In the first quarter, aluminium price was average around USD 1,514 per tonne. And in the second quarter, it has climbed up to USD 1,576 per tonne average during that quarter.And right now in July, last 12 days, average is working out to USD 1,623 per tonne that is USD 62 climb up in the first to second quarter and USD 47 dollar climbed up in third quarter of the month of July the last 12 days. So, there is a little forming of the price of London Metal Exchange (LME) during this time.This is mainly due to because in second quarter, the consumption of aluminium metal was around 15.39 million tonnes and production was around 14.58 million tonnes, leaving a deficit of 0.8 million tonnes and that had a lot of the effect for picking up of price in aluminium. At the same time there has been reported picking up in auto sector which is also helping in firming of the price, but if we compare, last year, price and this year’s price, we find that in 2014, the average LME price during that year was USD 1,880 per tonne, whereas in 2015 it climbed down to USD 1,663 per tonne and in 2016 till June, it is USD 1,543. That means it is a downward trend as far as the price is concerned year-on-year (Y-o-Y) and that is the situation as far as aluminium price still continues to be subdued, but a silver lining is there. It is starting to firm up. But in Q3, there is likelihood of production around 15.08 million tonnes on consumption at the same level. So, this deficit which is there in Q2 may not be there in Q3. So, there is some apprehension that the prices may again start softening. Add to that, information that China, there is likelihood of some of the smelters which had to close down, they may start operations.Sonia: You spoke about the aluminium prices that have risen to USD 1,625 per tonne. What about alumina prices? How have they been over the last couple of months compared to what we have seen in the previous quarter?A: Alumina prices, right now seems to be hovering around USD 260-270 and if we compare it with last 2-3 months, in that level it is there. And in March, February and January, the first quarter of 2016, that was around USD 240 but it has climbed up to USD 265, around USD 25-30 climb up there. So, there is also sign of little firming up of alumina price. But still these prices are quite low if we compare it with last year and the previous year. That is 2014-2015 the prices are still low, that is why the aluminium producers in India, they are getting a lot of problem as far as price is concerned.Anuj: Let us talk about aluminium again because in the last year three out of four quarters, you had negative earnings before interest, taxes, depreciation and amortisation (EBIT), Q4 was positive. What is the outlook for FY17? Of course, a lot will depend on prices, but in current environment, what kind of outlook do you have?A: As far as outlook is there in the coming months and the coming quarters, we hope that even if the prices do not firm up much, but it cannot slide down, that is where our assumption is. And maybe aluminium price will be somewhere around USD 1,560-1,600 per tonne, it will go, the average will come in that range.And alumina price, maybe alumina will also be hovering somewhere around USD 260-270 to USD 285-290, around USD 30 we are expecting that there is a firming up. In that though profitability as compared to the last year will be under pressure because these prices are lesser than what the last year price was there. But at least it will not slide down.