Shares of National Aluminum Company (NALCO) fell by more than 8 per cent in intra-day trade on Thursday, December 12, while the stock closed the day down by more than 7 per cent. 251.80. The stock has closed in the red for the third consecutive day. Analysts attributed this decline to several factors, the main one being the fall in alumina prices.
“Nalco stock witnessed a 7% decline, mainly due to fall in alumina prices, which have softened in recent weeks. Adding to the pressure, Australian miner South32 has withdrawn its production guidance, indicating potential challenges in the sector,” said Santosh Meena, head of research at Swastika Investmart.
Alumina prices cool down
Alumina prices – which have doubled this year – fell from above $800 to $724 on the London Metal Exchange (LME). since NALCO Sells products in the open market, the fall in prices has affected the shares of the public sector company.
demand concerns
Another factor contributing to the decline in NALCO shares is the withdrawal of guidance by Australian miner South32 for its aluminum smelter in Mozambique due to widespread and deadly protests in the country.
The miner had forecast 360,000 tonnes of aluminum output from the smelter, which is near the capital Maputo, in the fiscal year to June 2020, according to a Bloomberg report. The reduction in production will result in a decline in demand for alumina, which is a raw material for the production of aluminium.
Additionally, a Bloomberg report suggested that aluminum smelters in China are cutting production following a rise in raw material prices, which is expected to further impact alumina demand, and in turn, prices and May be less.
stock price trends
Despite three days of decline, NALCO’s share price has increased by a whopping 135 per cent in the last one year. multibagger return To investors.
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