With slump in auto and construction sector, the key industries which consume this metal, inventory levels have gone up a record 15 year high in LME. With pressure from inventory level, the price of it may drop further. Many players say, that inventories were gradually piling up in the last nine months and there are no signs of immediate revival, unless govt. stimulus packages revives the industry demand. Many small timers, who prefer to stockpile rather to sell at low price. It has a rough year for the metals industry and many aluminium smelters have cut production or shut shop over the last 6 months, citing low demand.
Nalco, key producer of aluminium has announced cost-cutting measures to survive this lean phase. Globally, under recessionary trends and low demand, price of aluminium has been falling and Nalco has also announced cuts in the last three months. As sustenance measures, Nalco is implementing austerity measures like moving out of imported coal, cutting avoidable administrative expenses , entertainment expenses etc., However, Nalco so far has not announced any production cuts