Operating margins of the domestic primary aluminium companies are likely to shrink by 400-500 bps sequentially in the second quarter of 2022-23 due to factors like high input costs, rating agency ICRA said on Thursday.
“Owing to a twin onslaught of correction in aluminium prices and elevated input costs, the estimated operating profitability of ICRA’s sample set of domestic players is likely to contract sequentially by almost 400-500 bps in Q2 FY2023 compared to Q1 FY2023,” ICRA said in a statement.
International prices of aluminium have corrected by about 38% from the record high of about $3,900/tonne in March.
While in the first quarter of FY23 the average LME aluminium spot prices remained at $2,870 per tonne, the same have corrected in the second quarter of FY23 (YTD) to about $2,425 per tonne.
Further, the cost of power for domestic aluminium producers continued to remain high, due to lesser supply of coal linkage to non-power sectors and high price of dry-fuel in both global and domestic markets.
