>ALUMINIUM BOWLED BY OVERSUPPLY

The domestic demand of Aluminium is lower and the same is the situation in international
markets, where prices are consolidating in a narrow range because of higher inventories and
surplus in the markets. Recently released, China general administration of customs report said
that Aluminium imports were down on a monthly basis by as much as 34%, in February.
This can act as a very big drag for the prices as the markets very heavily rely on the prospects
and triggers from one of the world’s biggest consumer of the metal. China was a net exporter of
the metal until 2008, but significant imposition of export duties and taxes lead to a u-turn in the
consumption levels.

The pattern is changing again and China has started exporting some of its stocks reserved earlier. This will be providing sentimental boost to sellers, though the exports are not substantial.

LME prices were at $ 2279 per tonne on 18th March 2010, marking a rise of 9.7% from 1st February 2010. These are also multi-month high levels for Aluminium.

The inventories have during the same period declined by a marginal 0.15% to 4618200 tonnes. We expect that the prices will be consolidating within a range and any fresh buying and
appreciation in prices will bend down by long liquidation and short positions at higher end.

Fall in production capacity to benefit Aluminium in longer run: IAI
The Aluminium prices are set to benefit from the fall in production capacity across the globe,
which has been a resultant of declining stockpiles mainly in London warehouses and dearth of
electricity in Aluminium, producing regions.

The data from International Aluminium Institute (IAI) for the month of January suggests that the total primary Aluminium production stood at 1995000 tonnes, which was a decline of 4.7%. The total production for the month of Jan 2009 was 2094000 tonnes.

In Asia ex China, the production of primary Aluminium was 396000 tonnes in January 2010 as
against 356000 tonnes in January 2009, up 11.23%.

For the full year ending 2009, the total production of primary Aluminium in Asia was 4401000
tonnes.

China cumulative production increases, Fall on M-o-M basis: China cumulative production of Jan-Feb 2010 stood at 161989 tonnes, up 39% from Jan-Feb 2009 where the cumulative production was 116422 tonnes. The latest data from General Administration of Customs of China said that Aluminium imports from February were 64356 tonnes, which was down 34% from imports of 97633 tonnes in January 2010.
The fall of Aluminium on a monthly basis is expected to check any speculative rise in short term.

The dollar moves are strong which is bringing liquidation in Copper. It will be interesting to see
how the imports of metal stand in coming months from China.

Indian Aluminium production increases in January
Indian Aluminium production increased in the month of January 2010, following the trial run
production from Vedanta Aluminium Limited (VAL). Vedanta has commissioned its smelter at
Jharsuguda from April, 2008.

VAL produced 27367 tonnes of Aluminium in January 2010. On a monthly basis, NALCO
registered a fall of 2048 tonnes in Aluminium production in Jan 2010 when compared to its
production targets of 39200 tonnes.

On a cumulative basis, Nalco’s production for the period of April-Jan 2010 was up by 19.71% to
355893 tonnes as against 297296 tonnes in April-Jan 2009. Bharat Aluminium Company
(BALCO) production for Jan 2010 was 21793 tonnes as against 22298 tonnes the production
target. When compared on a Y-o-Y basis, the cumulative production of BALCO was down
27.20% to 355893 tonnes in April-Jan 2010.

To read the full report: ALUMINIUM