Weak outlook for aluminium as demand, prices will take time to recover

NEW DELHI :Falling aluminium prices that eroded the profitability of manufacturers over the past year are likely to remain range-bound in the second half of FY23, too, experts said.

Global demand has been weak, and expectations of a recovery in China lifting prices haven`t borne fruit. China`s recent export-import data was not encouraging, and its inflation print confirmed that recovery in the world`s second-biggest economy is losing steam, analysts said.

[For aluminium, with Chinese smelters restarting and demand remaining weak in the western economies, the slight oversupply situation may persist at least till the end of 2023," said Jayanta Roy, senior vice-president and group head, Icra. Hence, aluminium prices may remain in the $2,100-2,300 a tonne range in the second half of the year, he added.

Satish Pai, managing director, Hindalco Industries Ltd, too, said after the company`s earnings release that he expects aluminium prices to stay in the same range.

Imports of Chinese foils have picked up, and analysts said imports of other products too can rise if China`s domestic demand remains weak. Aluminium prices on the London Metal Exchange (LME) that had averaged $2,395 a tonne during the March quarter have fallen further to the $2,161 a tonne level in the June quarter, impacting profitability.