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Investing in Aluminium

Commodity Market all across the world is growing at a aggressive speed and even common people like team shop vendors have started trading in commodity market. In this article, I am giving a brief note on aluminium as an Investment Option.

Aluminium - Characteristics

  • Aluminium is the third most abundant element in the Globe.
  • In nature however it only exists in very stable combinations with other materials (particularly as silicates and oxides) and the existance of aluminium is been found proved only in the year 1808.
  • Aluminium keeps its toughness down to very low temperatures, without becoming brittle like carbon steels. It is easily worked and formed. Aluminium conducts electricity and heat nearly as well as copper.
  • Aluminum is very light and its density is only one third that of steel. Aluminum is resistant to weather, common atmospheric gases and a wide range of liquids. Aluminum has a high reflectivity, and therefore finds more decorative uses. Aluminum has high elasticity, which is an advantage in structures under shock loads.

Supply and Demand Position of Aluminium

Global Scenario:

  • Aluminium ore, most commonly bauxite, is abundant and occurs mainly in tropical and sub-tropical areas like Africa, West Indies, South America and Australia. There are also some deposits fo aluminium in Europe.
  • The leading aluminium producing countries are United States, Russia, Canada, the European Union, China, Australia, Brazil, Norway, South Africa, Venezuela, the Gulf States (Bahrain and United Arab Emirates), India and New Zealand; The share of these countries is more than 90 percent of the world\'s primary aluminium production.
  • The largest markets for aluminium are North America, Europe and East Asia.

Indian Scenario :

  • India is ranked as the fifth largest producer of aluminium in the world.
  • It is estimated that around 3037 million tonnes produced from all categories of bauxite (proved, probable and possible). With the present level of consumption of aluminum, the identified reserves would have an estimated life of over 350 years. India\'s reserves are estimated to be 7.5 per cent of the total deposits and installed capacity is about 3 per cent of the world.
  • In terms of demand and supply, the situation is not only self-sufficient, but it also has export potential on a competitive basis. India is exporting 82,000 tonnes of aluminium every year.
  • About 14 years back, the primary Indian aluminium producers were BALCO, NALCO, INDAL, HINDALCO and MALCO. Of the five, BALCO and NALCO were in the public sector while the other three were in the private sector.
  • As a result of the process of liberalization of trade in aluminium, India has emerged as a net exporter of aluminium, on competitive terms. Government monopoly, in terms of aluminium production, removal of price and distribution control over aluminium, has been diluted in favour of private sector. The ownership pattern in private sector has undergone changes. HINDALCO has been emerged as the largest producer of aluminium in India after the taking over of INDAL.

World Aluminium Markets

LME, TOCOM, SHFE and NYMEX are the major international markets that provide direction to the aluminium prices.

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