Hindalco, NALCO and Vedanta jump up to 5% as aluminium prices top $2,850

Shares of India's copper and aluminium makers such as National Aluminium Company (NALCO), Hindalco Industries, and Vedanta surged by up to 5.3% during Friday's intraday trade, October 24, in an otherwise subdued market, as the continued rally in global aluminium prices brought these counters into the spotlight. The companies are seen as key beneficiaries of the rise in base metal prices.

NALCO led the charge, with its stock climbing 5.3% to ₹240, while Hindalco Industries jumped 4.3% to an all-time high of ₹826, and Vedanta followed closely, rising 3.7% to ₹501.

Extending their gains for a third straight session, three-month aluminium on the London Metal Exchange (LME) was up 1% at $2,810 a metric ton by 11:45 IST after hitting $2,853, the highest level since June 9, 2022, earlier this week.

The recent surge has pushed aluminium to gain 8% so far in October, building on a 3% rally in September. Domestically, aluminium for November delivery rose by ₹1.20, or 0.45%, to ₹268.65 per kg on Thursday, marking its fourth consecutive session of gains.

Why are aluminium prices surging?

The sharp rally was triggered by growing concerns over supply shortages after a smelter incident in Iceland. According to multiple media reports, a smelter owned by Century Aluminum in Iceland was forced to curtail production by two-thirds due to an electrical equipment failure.

The supply outlook was further clouded by China’s aluminium output nearing its 45-million-ton cap this year. Beijing has also revised its annual base metal production growth target down to 1.5% for next year, from 5% earlier, as part of its broader “anti-involution” campaign aimed at stabilizing deflationary pressures.

Additionally, Alcoa announced the closure of its Kwinana alumina refinery in Australia due to deteriorating bauxite ore grades. As a result, primary aluminium stocks at the LME have declined nearly 25% this year to 484,000 tonnes, according to media reports.

Impact on Indian companies

Hindalco’s domestic business is directly linked to rising aluminium prices. NALCO also benefits through its aluminium and alumina sales, while Vedanta, which derives a large share of its revenue from aluminium, is expected to demerge its aluminium business in the coming months.

Meanwhile, the Vedanta Group on Thursday announced plans to invest an additional ₹1 lakh crore in Odisha. The investment will include a ferro-alloys plant in Keonjhar and two new aluminium parks, one in Jharsuguda and another at a site identified by the state government. The company has already invested around ₹1 lakh crore in the state.

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