Norsk Hydro, the largest aluminium refinery company in the world is in the news today. Its Brazilian unit which was partly shut down due to pollution is said to be nearing a deal to restart the plant in about two months time.
Norsk Hydro said yesterday that it had signed two deals with Brazilian authorities involving social and environmental obligations, in a move that could pave the way for a resumption of full output at the company’s Alunorte alumina.
Post this partial shut down, aluminium prices shot through the roof as supply became tight. Along with the shut down, the situation was exacerbated by U.S. sanctions on Russian aluminum maker Rusal. Alumina prices have catapulted up by 40% since the end of June to around $640 a tonne.
This news means that once the unit resumes full production, despite sanctions on Rusal, the supply situation could ease, which in turn could bring down the prices.
In the Indian context, this is not good news for the aluminium makers as they have been the beneficiary of this tight situation. Though production will be restored to 100% only by mid-2019, the worry pangs have already started.
Reacting to this news, Nalco is the top loser in the metal index and second top loser on the BSE currently. The stock price slipped over 7% to Rs.70.95. Hindalco is also down over 2% at Rs.235 levels.