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Indian aluminium companies like Vedanta, Hindalco, and Nalco saw share price gains. Analysts suggest these gains may not last. Aluminium prices rose due to West Asia conflict and supply disruptions. However, analysts believe current prices are unsustainable. Investors are advised to consider booking profits as share prices are expected to consolidate.
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ETBFSIIndia aluminium manufacturing
Mumbai: Shares of local aluminium producers that rallied recently are likely to see a pullback, as the price of the metal is unlikely to sustain at the current levels, analysts said. They advise investors to take some profits as share prices are likely to consolidate.
Conflict in the West Asia has led to a spike in aluminium prices recently, with prices on the London Metal Exchange having risen 5% since then. In the domestic market, shares of Vedanta, Hindalco Industries and National Aluminium Co ended 1.5-6% higher on Thursday, outpacing gains in the broader market.
“Even before the West Asia conflict, aluminium prices were quite high in the range of $3,000-3,100 (per tonne), which is a good level for smelters to make cash,” said Aditya Welekar of Axis Securities. “An upside in shares will be only if prices (aluminium) increase further, and that will be a blue-sky scenario if geopolitical events further deteriorate and the war continues,” he said.
Earlier this week, Doha-based QatarEnergy suspended the production of liquified natural gas following which, Qatalum, an aluminium smelter in Qatar, initiated a shutdown of production. The Gulf Cooperation Council accounted for a little over 8% of the primary aluminium produced in 2026, data on the International Aluminium Institute showed.
Vedanta, Hindalco Industries and National Aluminium are the key aluminium producers in India, which is the second largest producer of aluminium in the world with an annual capacity of more than 4 million tonnes.
Two factors are playing out in pushing aluminium prices higher, Satyadeep Jain of Ambit Capital said. Given the energy-intensive nature of aluminium, higher energy prices are pushing up the cost curve and consequently prices, while supply disruptions are adding to these gains.
“The benefit for Indians (Indian companies) is that they rely on coal and most of this coal is through long-term contracts. So, the cost does not go up as much, but prices go up more,” he said.
Jain is also of the opinion that the current prices of aluminium, and consequently share prices of the producers, were not sustainable at the current levels. “A lot of supply disruptions have come to the rescue of aluminium, but fundamentally, there is not much to drive prices higher,” he said.