Shares of domestic aluminium maker Nalco are higher by nearly 5% in early trade, helped by global major Alcoa Corporation's robust quarterly profit, as well as strong alumina prices.
Lower raw material cost was also one of the factors helping Alcoa's quarterly results. Futures prices of alumina - a key ingredient in making aluminium - have risen over 45% this year, as supply remains tight.
Alcoa's Strong Show
Alcoa's revenue for quarter ended September was $2.9 billion, 11.6% higher on YoY basis, while net income was $90 million, higher than analyst estimates.
“Alumina is acutely short currently – it’s a very very tight market, so we have seen alumina prices run up rapidly over the last 90 days,” CEO Bill Oplinger told Bloomberg News. “The tightness should persist through the first half of next year.” Alcoa is the world's eighth-largest producer of aluminium.
The China Factor
China, which accounts for about half of the world’s aluminium output, has continued with record aluminium production, easing global supply risks. A note by Shanghai Metals Market (SMM) said that China's output may continue in the fourth quarter as well. Globally, there is a rising demand for aluminium from electric vehicles and solar cell manufacturers. SMM said this high demand is expected to keep the prices elevated.
A push from China to rev up demand in its housing market and boost economic growth through stimulus is also expected to bode well for the sentiment in metal prices.
For the year, shares of Nalco are higher by 67%, and up 22% in the last one month.
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