Manthan – Metals & Mining – Aluminum: Higher for Longer??
Published on 06 Mar 2026
Geopolitics is once again taking a center stage for the global aluminum market with closure of Strait of Hormuz amid ongoing middle east crisis. Supplies of LNG are getting disrupted leading to force majeure announcements from various smelters. If the situation persists, it is expected to increase the global aluminum deficit and lead to higher aluminum prices at 1HFY27 as global stocks are already at lower levels. We present the geography wise production of metal and alumina to understand the severity of the ME crisis. Our picks: With strong LME, all Indian non-ferrous ally manufacturing companies are expected to benefit over next few quarters. We expect NACL to be a significant beneficiary of the current situation as it has captive coal mines supplying ~57% of coal requirements and it is a pure play on pricing. We have LME prices of USD3,001/2,932 for FY27/28E in our assumptions. With every USD100/t increase in ally prices, NACL/HNDL EBITDA gets upgraded by ~5.5%/4% respectively unless there is any other significant cost escalation.
