National Aluminium Profit to Rise on Prices, Output (Update1)

June 5 (Bloomberg) -- National Aluminium Co., India’s second-biggest producer, said first-quarter profit will increase from the previous three months, aided by higher production and prices of the metal used to make aircraft and beverage cans. Net income will exceed the 830.2 million rupees ($18 million) posted in the fourth quarter ended March 31, Chairman C.R. Pradhan said. Aluminum prices are expected to stabilize at about $1,500 a metric ton and rise to $1,800 a ton in a “few months,” he said. Aluminum demand is recovering as the global economy emerges from the deepest slump since World War II. Sales to carmakers and builders in China, the world’s largest consumer, is gaining, according to the Chinese unit of Alcoa Inc., the largest U.S. aluminum producer. United Co. Rusal, the world’s largest, said on June 2 it expects prices to gain significantly from the third quarter after rising stockpiles prompted smelters to curb output. “Demand is rising, so National Aluminium will stand to gain as it is raising output,” said Niraj Shah, an analyst at Centrum Broking Pvt. “The aluminum scenario is gradually improving.” Shah has an “underperform” rating on the stock. National Aluminium shares, up 81 percent this year, rose as much 3.3 percent to 355 rupees and traded at 351.85 rupees at 10:22 a.m. in Mumbai. Futures Contracts Aluminum’s open interest, or the number of futures contracts outstanding, jumped to a record on the London Metal Exchange, signaling prices may gain. Exchange open interest, reflecting the number of positions held by members of the LME, advanced to 809,861 on June 2. “Signals that China’s consumption is rising is good news for the industry,” Pradhan said in an interview yesterday. “Globally the outlook is becoming more positive.” Aluminum for three month delivery gained almost 14 percent since April 1 and traded at $1,573, up 0.5 percent, at 7:52 a.m. India time on the London Metal Exchange. Nalco, as the Bhubaneswar, eastern India-based company is also called, is raising its annual production to 435,000 tons from about 360,000 tons a year ago, Pradhan said. The output of alumina, the key aluminum-making material, may increase to 1.86 million tons from an estimated 1.62 million tons, he said. The company is scouting for coal mines in Australia to secure supplies of the fuel, Pradhan said. National Aluminium is also in talks with companies in Indonesia to form coal mining ventures in the country, he said, without elaborating. The company will import 150,000 metric tons of coal at $65 a ton from Indonesia, Pradhan said on May 26.