Copper & Aluminum prices will remain strong this year too: Satish Pai, MD, Hindalco

Satish Pai, Managing Director, Hindalco, talks about Q4FY21 numbers, EBITDA, margins, sales of value-added products, upside in prices of copper and aluminium among others during an interview with Swati Khandelwal, Zee Business. Edited Excerpts:

Q: Numbers are in line, Copper segment saw YoY growth of 80% while the Aluminium segment only saw a growth of only 13%. What is the reason for subdued growth in the Aluminium segment?

A: Year-on-Year Aluminum didn’t have a subdued growth and EBITDA at Rs 1,600 crore is nearly 55% YoY growth. So, the EBITDA that you are seeing in Q4 has been the highest in the history of Hindalco. So, the performance of India Aluminum is very superlative. The reason for this is that LME was very high at $2000/ton and our cost of production was under control. This is why the 27% Aluminum EBITDA margin at Rs 1,610 crore that is visible is the highest ever in the history of Hindalco.

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Q: What is your outlook on the consolidated margins and what will be its level and trajectory going forward?

A: We are looking at Aluminum at present and its prices have already increased by around $300-400 per ton in Q1FY22 as compared to Q4FY21. Currently, it is priced at $2,400 while it was $2000 in Q4FY21. So, aluminium margins are expected to increase quarter-on-quarter. Copper is not about margins it is about TCRC, which is quite low and we are about to take a shutdown of smelter unit in the first quarter. So, copper results will be slightly subdued in the first quarter but it should come back from the second quarter. So, the copper results will be slightly subdued in the first quarter but in aluminium, the margin should increase on a quarter-on-quarter basis.

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Q: How were the sales of value-added products during the quarter?

A: If you see that we have got extrusions and roll products of 92 KT in India, which is 28% of the sale value-added, this is one of the highest ever. So, if you remember our strategy, we have said that value-added as a percentage of total sales will be increased. In FY22, we have a plan to at least 330 KT of FRP and extrusions. As a percentage, it will continue to increase because it will create an additional EBITDA over primary metal. And, demand for roll products and extrusions is very strong in the Indian market.

Q: Copper & Aluminium both have been projected for a huge upside in prices due to supply issues. So, what is your outlook on prices on both metals?

A: Everyone is saying that the metal supercycle is going on or not. So, on this, we can just do this year is that supply and demand situation will remain very tight. Currently, the Chinese and the US economies are very strong, the governments have announced stimulus. So, I am very confident that copper and aluminium prices will remain very strong this year. It is hard to say that what will happen after a year but in this financial year, I am quite confident that aluminium and copper prices will remain firm.  

Q: What impact China’s announcement to control commodity inflation will have? Also, the China-Australia tussle will have a lasting impact on aluminium prices?

A: Whatever it is, there is a basic fundamental. A lot of statements are made, which has an immediate effect but if we step back a bit and look at the fundamentals then the supply and demand situation is very tight. So, demand is quite strong and supply is quite tight. This is why I am very confident that the commodity prices of aluminium and copper will remain firm. If there is an economic slowdown then only I will get worried but statements and other issues continue to happen but fundamentals of supply and demand are very strong for commodities.