Indian aluminium stocks remained under pressure as the sector extended its recent decline, tracking softer aluminium prices, a stronger US dollar and cautious market sentiment. Share prices of Vedanta Aluminium and Vedanta Limited Hindalco Industries, and National Aluminium Company Limited (NALCO), all traded lower. At the same time, brokerage InCred Equities issued a bearish outlook, advising investors to reduce exposure to aluminium-focused stocks and “sell all aluminium names.”
During Thursday’s trade, Vedanta Aluminium fell 4.13 per cent to INR 444 (USD 4.64) per share, Vedanta Limited slipped 2.75 per cent to INR 274.95 (USD 2.87), Hindalco declined 1.6 per cent to INR 960.5 (USD 10.03), and NALCO dropped 3.2 per cent to INR 337.5 (USD 3.52).
InCred Equities argued that the market is misreading aluminium fundamentals by focusing solely on primary supply constraints.
According to the brokerage, investors are assessing aluminium “through the lens of primary metal,” whereby China’s 45-million-tonne annual production capacity cap and, more recently, the “Rest of World (ROW) supply was disrupted by the Middle East conflict.”
However, the report highlighted that being available for reuse, “Aluminium is not a consumed commodity like crude oil or coal,” but an “above-ground circular metal.”
“Nearly 1.5 billion tonnes of aluminium remains available above the ground, and almost 80 per cent of all aluminium ever produced is still part of the usable metal pool,” InCred added.
Based on this outlook, InCred expects aluminium prices to decline by around USD 800 per tonne, warning that pure aluminium producers could face significant earnings pressure.