Commodity Online
NEW DELHI: Declining auto sales thanks to the economic slowdown across several countries in the world have hit the aluminium industry. Aluminium prices are coming down day by day, prompting experts to say that the metal prices will crash all time low in the near future.

Shibu Swarup, a metal analyst, said that aluminum prices will come down from the current levels in days to come. "Aluminium is a very volatile commodity. The metal is in a bearish mood these days," he said.

Several countries led by Japan and US are are facing declining auto sales. Automobile sales in Japan fell last year to a 35-year low as a shrinking population and limited wage growth hurt demand. Japan Automobile Dealers Association showed sales of cars, trucks and buses down 7.6% from the previous year at 3.4 million.

The Indian scenario is not very different. Rising borrowing costs is affecting the auto industry. Purchasing powers of the customers are bound to be low on the back of inflation curbing regime of RBI. Dollar is trading at 6 months high against the EURO which reduces the appeal for metals like Copper and Aluminium. This is very unlikely scenario, as we have are used to see Dollar declines.

Another factor to be considered is that Aluminium inventories data is considered to be sufficient at 1000000 tones levels, the same is now at 1123825 tonnes. Technically speaking, Copper prices on MCX are near its support levels and further weakness will take prices towards 112 levels in coming days. LME three month forward contract support level lies at 2755 levels for the coming sessions.

Aluminium is one of the most widely used industrial raw materials all over the world. Known for its lightweight and corrosion resistance, Aluminium is an important material used in a wide spectrum of industries ranging from aerospace, engineering, transportation, logistics and construction. Mainly derived from bauxite ore, Aluminium is mainly found in tropical and sub-tropical regions in the world.

Global production of Aluminium is estimated to be 33 million ton in 2006. China, Russia, India, US, Australia, New Zealand, Brazil and Venezuela are the leading producers of Aluminium. Global consumption of Aluminium is estimated to register a growth 4 percent to 35 million tons in 2007. China is a leading consumer with 8.2 million tons in 2006 accounting for nearly a quarter of global consumption. Chinese consumption is projected to rise to 9.1 million tons in 2007.

India is rated as the fifth largest producer of Aluminium in the world. Production capacity is expected to increase with the completion of 35,000 ton per year smelting capacity at Hindalco and 245,000 ton expansion by Balco by the end of 2006. Annual consumption of India is projected to reach 780,000 tons in 2007 compared with 618,000 ton. India also exports around 82,000 ton of aluminium per year.

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