Nalco Beats Rival Aluminium Producers. Here’s Why

National Aluminium Company Ltd. is on its longest winning streak in more than eight years, gaining more than Hindalco Industries Ltd. and Vedanta Ltd.

That’s because the state-run company-an integrated player that makes raw materials to final products-is the most sensitive to changes in prices of aluminium and alumina among the three rivals. There are two key reasons for it:

• One, Nalco sells almost its entire alumina volume at spot or index prices against the earlier practice of bench-marking it to a certain percentage of the aluminium rates on the London Metal Exchange.
• Second, higher prices of aluminium will help it turn around its loss-making aluminium business.

Shares of Nalco rose more than 21 percent in the last eight trading days—the longest stretch since 2009-compared with 12.5 percent gains for Hindalco and an 8.11 percent jump for Vedanta. The stock surge comes as prices of aluminium and alumina increased after U.S. sanctions on Russia’s United Co. Rusal, the largest producer of the base metal outside China. Output curtailment at Alunorte, the world’s largest alumina refinery, aided the rally.