Hindalco Profit Falls on Lower Copper-Refining Fees (Update1) -Shanghai Metals Market

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Hindalco Profit Falls on Lower Copper-Refining Fees (Update1)

Industry News 08:55:29AM Jan 26, 2010 Source:SMM

Jan. 25 (Bloomberg) -- Hindalco Industries Ltd., India's largest aluminum producer, reported a 22 percent drop in profit in its third quarter because of rising power costs and lower copper-refining fees.

Net income, excluding that of unit Novelis Inc., fell to 4.27 billion rupees ($93 million) in the three months ended Dec. 31 from 5.45 billion rupees a year earlier, the company said in a National Stock Exchange statement. Profit fell short of the 4.5 billion rupee median estimate of 12 analysts surveyed by Bloomberg. Sales rose 30 percent to 52.9 billion rupees.

Electricity expenses, which account for about 40 percent of the cost of smelting aluminum, rose after state-owned monopoly Coal India Ltd. increased prices by an average 11 percent in October. Also, earnings from copper business fell on lower treatment and refining charges, analysts said.

"Despite higher volumes in the copper-smelting business the profits were lower due to poor realization," said Rahul Jain, an analyst at RBS Equities (India) Ltd.

Hindalco, the nation's second-largest copper producer, also agreed to a 38 percent reduction in 2010 copper-processing fees for Freeport-McMoRan Copper & Gold Inc., two people familiar with the matter said last month. The fees for producing metal from semi-processed ore, known as concentrate, drop when there is a shortage as smelters compete for supplies.

Prices of aluminum for three-month delivery averaged $2,037 a metric ton in the quarter ended Dec. 31, compared with $1,885 a year earlier, data from London Metal Exchange showed.

Aluminum Stockpiles

The exchange's aluminum stockpiles reached a record 4.64 million tons on Jan. 21. Stockpiles monitored by the Shanghai Futures Exchange jumped 6.8 percent this week to 20,944 tons, the highest since at least 2003, data on the Bloomberg show.

The shares of the company fell 1.3 percent to 159.20 rupees at the close in Mumbai trading today. The stock almost quadrupled last year, compared with a 93 percent gain in the Bombay Stock Exchange's benchmark Sensitive Index.

Aluminum production in China, the world's largest consumer of the metal, may climb to more than 17 million metric tons this year, outpacing demand, Wan Ling, an analyst at CRU International Ltd., said on Jan. 23.
 

Hindalco Profit Falls on Lower Copper-Refining Fees (Update1)

Industry News 08:55:29AM Jan 26, 2010 Source:SMM

Jan. 25 (Bloomberg) -- Hindalco Industries Ltd., India's largest aluminum producer, reported a 22 percent drop in profit in its third quarter because of rising power costs and lower copper-refining fees.

Net income, excluding that of unit Novelis Inc., fell to 4.27 billion rupees ($93 million) in the three months ended Dec. 31 from 5.45 billion rupees a year earlier, the company said in a National Stock Exchange statement. Profit fell short of the 4.5 billion rupee median estimate of 12 analysts surveyed by Bloomberg. Sales rose 30 percent to 52.9 billion rupees.

Electricity expenses, which account for about 40 percent of the cost of smelting aluminum, rose after state-owned monopoly Coal India Ltd. increased prices by an average 11 percent in October. Also, earnings from copper business fell on lower treatment and refining charges, analysts said.

"Despite higher volumes in the copper-smelting business the profits were lower due to poor realization," said Rahul Jain, an analyst at RBS Equities (India) Ltd.

Hindalco, the nation's second-largest copper producer, also agreed to a 38 percent reduction in 2010 copper-processing fees for Freeport-McMoRan Copper & Gold Inc., two people familiar with the matter said last month. The fees for producing metal from semi-processed ore, known as concentrate, drop when there is a shortage as smelters compete for supplies.

Prices of aluminum for three-month delivery averaged $2,037 a metric ton in the quarter ended Dec. 31, compared with $1,885 a year earlier, data from London Metal Exchange showed.

Aluminum Stockpiles

The exchange's aluminum stockpiles reached a record 4.64 million tons on Jan. 21. Stockpiles monitored by the Shanghai Futures Exchange jumped 6.8 percent this week to 20,944 tons, the highest since at least 2003, data on the Bloomberg show.

The shares of the company fell 1.3 percent to 159.20 rupees at the close in Mumbai trading today. The stock almost quadrupled last year, compared with a 93 percent gain in the Bombay Stock Exchange's benchmark Sensitive Index.

Aluminum production in China, the world's largest consumer of the metal, may climb to more than 17 million metric tons this year, outpacing demand, Wan Ling, an analyst at CRU International Ltd., said on Jan. 23.