ET NowAluminium prices will be supported by increasing in input prices, the prices of caustic soda will be a critical input for making it up, said TK Chand.

In a chat with ET Now, TK Chand, CMD, Nalco, talked about the company’s sales and impact of China on aluminium prices. Edited excerpts:

Let us start with the sales, they have been muted can you give us a breakup of the volumes and realisations?

As far this quarter is concerned this second quarter our top order has been increased by 10% from Rs 1645 crore to Rs 1813 crore. That is one thing and then as far as the realisations is concerned, there is a slight improvement in the realisation around 3% to 4% but on expenses side, input cost have increased, particularly the cost of caustic soda, then coal and say some clean environment, that also is the another factor which has led to increase in the expenses.

Do you see subsequent quarters also giving you a bad performance or is there hope for the second?

Our second half, we are expecting a better performance because prices of aluminium has moved if you see from September to November, it has moved by around 9% but that will at high volatility in the market. Then November still low and high range of aluminium prices is around $85, that is 1692, between 1692 and 1702, this has moved and of course in this year, we expect that till the end of the year the prices will remain far because of market deficit and also there is an increase in the consumption. But the prices of aluminium still on the risk because one thing is that once these prices are getting firmed, idle smelters in China – they are responding by making production. So in 2017, there is a likelihood of that China may become again surplus in the market and that would be coming to the international market. Apart from that thing, there are some on reported inventories lying in Vietnam and Malaysia, if those inventories are released to the market it will a market risk as far as the price of the aluminium is concerned. But the input cost increase and cost of smelting increases. This will be contributing and this will support an increase of the prices in aluminium so that probably balancing will come as far as 2017 is concerned, so we hope that third quarter the performance will be better but prices in the coming months, particularly in 2017 may continue to remain subdued.

Just one final word what is the outlook for aluminium prices into the second half of this year. How much momentum can you see with commodity prices as of now?

Yes, aluminium prices as I told that it will be supported by increasing in input prices, the prices of caustic soda will be a critical input for making up the aluminium, that is continuing to rise and there has been increase in green energy cess, that is another things which will be adding to the cost. Prices of aluminium has also been firming up in the market and all these factors will lead to an increase in the cost of production and that will support an increase in the prices. But as I told on the other side, there is likelihood of a risk of China making more production but one good thing is to see that the Chinese construction industry has been doing better than expected and if it continues, may be that the consumption in china will be more and then it will balance the global market, in that case, aluminium prices will move.