Non-ferrous
- Aluminum, copper and zinc prices created new highs in Q4FY2006, both in international and domestic markets. Also several price hikes were announced by the nonferrous metal companies during the quarter. These
developments should certainly have a positive impact on the Q4FY2006 performance of the non-ferrous companies. - Hindalco Industries raised aluminum prices by 16.2% or Rs17,000 per tonne in the quarter. The aluminium business saw a healthy volume growth on the back of a strong demand for the white metal. However, only a marginal recovery in copper production as compared with that in Q3FY2006 would offset the gains from the aluminum business and the company's earnings are expected to grow at 10.4%.
- Sterlite would benefit from an increased copper and aluminum production, higher TC/RC margins and excellent results from Hindustan Zinc. Its aluminum production business would benefit from the partial commissioning of the expanded part of the Korba facility.
- A strong demand for alumina coupled with supply shortages caused National Aluminium Company to revise its alumina prices by 16% during the quarter in line with the international prices. This coupled with a strong volume growth in its alumina and aluminum production business is likely to drive the OPM and profitability of the company in Q4FY2006.
- Zinc was the commodity in action during Q4FY2006. Hindustan Zinc raised zinc prices by 25.9% or Rs29,000 in the quarter. With a healthy growth in its realisations and volumes, the company should report the best growth in earnings.132%.among the entire metal pack.
- Ferrous metal companies were hurt by the overall uncertainty pervading in the international markets during the quarter which resulted in a sharp drop in the price of hot-rolled coils, sponge iron and pig iron. Respite came in March 2006 in the form of rising prices but the effect of the same will be felt only in Q1FY2007.
- Expect Tata Steel to end the quarter with a marginal drop of 3.4% in its profits. The benefit of higher metal production is likely to get negated by a lower average realisation in the quarter.
