Indian metal giants Hindalco, NALCO, and Vedanta recently saw their shares jump significantly, with some climbing over 5% in a strong display of market confidence. This impressive rally, witnessed on October 24th, was primarily driven by a substantial upswing in global aluminium prices. National Aluminium Company (NALCO) led the charge with a 5.3% climb, while Hindalco Industries hit an all-time high, surging 4.3%, and Vedanta followed with a 3.7% increase. The London Metal Exchange (LME) saw three-month aluminium prices reach $2,810 per metric ton, marking its highest level since June 2022, while domestic prices also rose to ₹268.65 per kg, putting these companies firmly in the investor spotlight.
So, what's behind this sudden spark in aluminium prices? The rally is largely attributed to growing concerns over global supply shortages. A major incident in Iceland saw Century Aluminum's smelter curtailing two-thirds of its production due to electrical equipment failure. Adding to the supply woes, China’s aluminium output is nearing its 45-million-ton cap this year, and Beijing has even revised its annual base metal production growth target down for the next year. Furthermore, Alcoa announced the closure of its Kwinana alumina refinery in Australia, exacerbating supply tightness. Consequently, primary aluminium stocks at the LME have plummeted by nearly 25% this year, creating a scarcity that's pushing prices higher.
For Indian companies, these global dynamics translate into tangible benefits. Hindalco’s domestic business is directly and positively impacted by rising aluminium prices. NALCO, with its robust aluminium and alumina sales, also stands to gain significantly. Vedanta, a major player deriving a large share of its revenue from aluminium, is strategically positioned to capitalize further, especially with plans to demerge its aluminium business in the coming months. Moreover, Vedanta has announced substantial new investments in Odisha, including a ferro-alloys plant and two new aluminium parks, underscoring its long-term commitment to the sector. These companies are clearly emerging as key beneficiaries in the current bullish commodity market.
