Shares of National Aluminium Company Limited (NALCO) experienced a significant decline of 7.38% on Thursday, December 12, 2024, closing at ₹231.11. This downturn is primarily attributed to recent fluctuations in alumina prices and emerging global market dynamics.
Alumina, a crucial raw material for aluminum production, has seen notable price volatility. Prices surged from approximately $600 per tonne to $820 per tonne but have recently receded to around $700 per tonne. This decline is partly due to Chinese aluminum smelters reducing operations in response to elevated alumina costs, leading to decreased demand for alumina.
Supply disruptions have further influenced alumina prices. For instance, production challenges in Mozambique have impacted global supply chains. Additionally, new alumina refinery capacities expected to come online in 2025, particularly in Indonesia and India, are anticipated to alleviate current supply constraints, potentially leading to lower alumina prices in the near future.
As a significant producer and seller of alumina, NALCO’s financial performance is closely tied to alumina price trends. The recent decrease in alumina prices has adversely affected NALCO’s profitability, contributing to the decline in its share value. Moreover, NALCO’s plans to commission a new 1 million tonne per annum alumina refinery next year could further influence its market position and financial outcomes.
Investor sentiment towards NALCO has been affected by these developments. Analysts have varied opinions on the stock, with some downgrading their ratings due to perceived peaking of alumina prices and anticipated declines in the future. For example, Kotak Institutional Equities downgraded NALCO to a ‘reduce’ rating, citing unattractive risk-reward dynamics.
On December 12, 2024, NALCO share price opened at ₹251.50, reached a high of ₹251.75, and dipped to a low of ₹228.46, before closing at ₹231.11, marking a 7.38% decrease from the previous day’s close. This significant drop reflects the market’s reaction to the aforementioned factors impacting the company’s performance.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
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