- 27 Nov 2024
- ICICI Securities
A LEADING GLOBAL ALUMINIUM PRODUCER HAS ANNOUNCED PRODUCTION CUTS
News: As per media sources, Russian aluminium producer Rusal plans to reduce its outputs by more than 6%, which is equivalent to 250,000 MT annually. This is in response to tepid demand in their domestic market and rising global alumina prices, driven by supply chain disruptions Guinea and Brazil, along with the production halts in Australia.
Views: This is anticipated production cut is likely to tighten the global aluminium supply, as Rusal, the world’s largest aluminium producer (ex-china) accounting 5.5% of global aluminium output in CY23.The resulted supply constraints are expected to push the aluminium prices, benefiting Indian aluminium companies such as Hindalco, Vedanta, and NALCO. Within these, we prefer Hindalco due to its strategic capacity expansion at Indian and Novelis operation amid healthy demand for Aluminium and copper metal due to its incremental application in automobile and renewable spaces, higher focus on value added products, improving operating efficiencies, and controlling B/S leverage with Debt to Equity at ~0.5x.
Impact: Positive