There is a positive sentiment, some imports have come down: Debnarayan Bhattacharya, MD, Hindalco

Aluminium and copper producer Hindalco Industries expects the second quarter to be as challenging as the first on account of high interest and depreciation cost, sliding aluminium prices and devaluation of the Chinese currency, according to its managing director Debnarayan Bhattacharya. In an interview with Megha Mandavia, Bhattacharya said improving domestic demand would reduce the company’s need to export almost half of its output. Edited excerpts:

ET: The first quarter was challenging for the company. What does the second quarter look like?

Bhattacharya: The effects on depreciation and interest will continue. What is unknown is what will the LME price will be, what will metal premium be, and what will the dollar-rupee exchange rate be? Now the latest uncertainty is the Renminbi. If the devaluation was of any other country’s currency, it should not have mattered so much. But this is China, which produces and consumes 50% of global aluminium. So the economy of China will, to a large extent, dictate the fortune of aluminium in terms of LME. So it is difficult to predict, but it will be challenging.





ET: We are halfway through the second quarter. How have aluminium prices on LME and premiums been?

Bhattacharya: It has declined further.



ET: Aluminium companies in India are thinking of idling capacity. Are you also thinking about idling any high-cost smelters?

Bhattacharya: No. At Hirakud, we have stopped some pots on account of a different reason. It is because Talabira coal mine was taken. Right now, we are building up our coal stock.



ET: You were exporting about half your aluminium production. Will the Chinese currency devaluation affect it?

Bhattacharya: No, I don’t think so. Besides, the market in India for us has improved. So, we believe that we would be able to sell more aluminium in the domestic market. Therefore, the necessity of exporting larger quantity of aluminium may not be required. We first fill up the domestic market, only then the overflow goes to the export market.



ET: What are the reasons behind the domestic market looking better?

Bhattacharya: There is a positive sentiment and some of the imports that used to happen, primarily as scrap, have come down.