Why did shares of NALCO fall over 8% on Thursday? Explained – CNBC TV18

Shares of NALCO Ltd. are trading with losses of over 7% on Thursday, December 12, declining to the lowest point of the day.

Here are some factors that are the key triggers behind the fall in price.

Firstly, the move in NALCO’s share price is now closely linked to the moves seen in prices of Alumina. Alumina is a key raw material for the production of Aluminium.

What makes NALCO more of an Alumina play is the fact that the state-run company sells the product in the open market.

Prices of Alumina had rallied to as much as $820 per tonne from $600, but have cooled off down to $700 per tonne.

One key factor is the fact that Chinese Aluminium smelters are finding the prices of Alumina too high, as a result of which a lot of Aluminium smelters are shutting down due to lack of demand. This results in the demand for Alumina going down.

Additionally, Australian miner South32 has withdrawn its production guidance for its aluminium smelter in Mozambique due to widespread and deadly unrest following the disputed presidential elections in the country. They had earlier guided for 3.5 lakh tonnes of Aluminium, which if taken off the system, will result in demand for 7 lakh tonnes of Alumina going down as well.

This might result in the 1-1.5 million tonnes of Alumina deficit coming down substantially.

For NALCO itself, the company is about to commission a new 1 MTPA alumina refinery next year.

Going forward though, analysts are expecting Alumina prices to be higher than the historical averages.

Out of the 11 analysts that have coverage on NALCO, five of them have a “buy” rating, while three each have a “hold” and “sell” recommendation on the stock.

Shares of NALCO are trading 8.5% at ₹228.7. The stock is witnessing profit booking from higher levels, having surged 71% so far in 2024.