INDIA BUSINESS WORLD - March 16^th - March 31^st - 2008

ALUMINIUM PRICES SLASHED

Price of aluminium, the metal used widely in transportation, consumer durables and power distribution industries, has been reduced by Rs 10,000 per tonne from March 20, in line with international trends as commodity prices globally have declined after the US Federal Reserve cut interest rates.

The cut, the third price revision in March and the fifth in two months, has been the most sharp so far, say traders, adding that the trend is more due to investment strategies than traditional supply-demand fundamentals.

Nalco, the state-owned aluminium company, took the lead as always, by cutting price of ingots by Rs 10,000 to about Rs 130,000 per tonne, underscoring a departure from earlier tradition when aluminium prices were revised monthly. Aluminium prices had been changed on March 11 and 1, and earlier on February 16. “International prices of aluminium have been fluctuating and it’s very difficult to pinpoint any particular reason for that,” Nalco chairman C R Pradhan said. “But supply demand factors and hoarding to some extent are being attributed,” he added, ruling out any speculative activity.

Nalco, which is Asia’s largest alumina maker, has the capacity to manufacture 345,000 tonnes of aluminium a year. Apart from Nalco, other aluminium producers such as Hindalco Industries and the Sterlite-controlled Balco too reduced prices after the cash settlement price on the LME declined sharply to about $2,850 per tonne from $3100, after investors pulled out funds from metals, crude and gold post the Fed cut rates and after funds were shifted to equity markets.