Vedanta Aluminium, NALCO at risk? Up to 40% downside seen
Aluminium prices have been in freefall, dragging aluminium stocks lower. InCred Equities has advised investors to exit all aluminium names, warning of a potential 30–40% downside amid mounting headwinds.
The domestic brokerage said that aluminium's bull-case scenario is being built on the wrong framework. While investors continue to look at aluminium through the lens of primary metal where supply looks tight, InCred noted that aluminium is not a consumed commodity like crude oil or coal - it is an above-ground circular metal.
Aluminium supply deficit worries ignore secondary sources
“Nearly 1.5 billion tonne of aluminium remains available above the ground, and almost 80% of all aluminium ever produced is still part of the usable metal pool. Hence, the real question is not only primary smelter supply, but how quickly scrap can be collected, sorted, remelted and reintroduced into the supply chain,” it said.
“China is the clearest example. Its primary aluminium output has risen from 41.6 mt in 2023 to 44.0 mt in 2024 and is now close to the 45 mtpa policy cap, making the primary balance look structurally tight. However, this ignores the secondary aluminium pool. China’s secondary aluminium consumption rose from 12.7 mt in 2024 to 13.35 mt in 2025, while scrap imports increased from 1.7 mt in 2023 to 2.02 mt in 2025. Around 80% of China’s scrap supply is domestic, suggesting the visible primary deficit is being replenished through domestic scrap, imported scrap, and rising recycling capacity," InCred highlighted.
Middle East disruption cools down
The domestic brokerage noted that the Middle East disruption also appears to be a temporary rather than structural supply shock. Around 2.2 mtpa of primary capacity was affected, but supply from Qatar Aluminium and Alba can normalise relatively quickly, while only EGA’s Al Taweelah may remain a longer outage risk. “As the war-risk premium unwinds, London Metal Exchange (LME) aluminium prices should correct despite low inventories and some regional premium tightness,” it added.
Also read: Vedanta, NALCO, Hindustan Zinc shares fall up to 3% as silver, aluminium, other metal prices tumble. Here's why
Stretched valuations in aluminium stocks
With aluminium prices vulnerable to $800/ton fall, InCred believes that the current valuations of NALCO, Vedanta Aluminium, and Hindalco Industries look stretched. “We therefore remain negative on aluminium names, with a 30–40% downside risk likely,” it added, while advising investors to sell any aluminium stock they may own. The domestic brokerage has a ‘Reduce’ call on NALCO and Hindalco Industries.
The domestic brokerage said that aluminium's bull-case scenario is being built on the wrong framework. While investors continue to look at aluminium through the lens of primary metal where supply looks tight, InCred noted that aluminium is not a consumed commodity like crude oil or coal - it is an above-ground circular metal.
Aluminium supply deficit worries ignore secondary sources
“Nearly 1.5 billion tonne of aluminium remains available above the ground, and almost 80% of all aluminium ever produced is still part of the usable metal pool. Hence, the real question is not only primary smelter supply, but how quickly scrap can be collected, sorted, remelted and reintroduced into the supply chain,” it said.
“China is the clearest example. Its primary aluminium output has risen from 41.6 mt in 2023 to 44.0 mt in 2024 and is now close to the 45 mtpa policy cap, making the primary balance look structurally tight. However, this ignores the secondary aluminium pool. China’s secondary aluminium consumption rose from 12.7 mt in 2024 to 13.35 mt in 2025, while scrap imports increased from 1.7 mt in 2023 to 2.02 mt in 2025. Around 80% of China’s scrap supply is domestic, suggesting the visible primary deficit is being replenished through domestic scrap, imported scrap, and rising recycling capacity," InCred highlighted.
Middle East disruption cools down
The domestic brokerage noted that the Middle East disruption also appears to be a temporary rather than structural supply shock. Around 2.2 mtpa of primary capacity was affected, but supply from Qatar Aluminium and Alba can normalise relatively quickly, while only EGA’s Al Taweelah may remain a longer outage risk. “As the war-risk premium unwinds, London Metal Exchange (LME) aluminium prices should correct despite low inventories and some regional premium tightness,” it added.
Also read: Vedanta, NALCO, Hindustan Zinc shares fall up to 3% as silver, aluminium, other metal prices tumble. Here's why
Stretched valuations in aluminium stocks
With aluminium prices vulnerable to $800/ton fall, InCred believes that the current valuations of NALCO, Vedanta Aluminium, and Hindalco Industries look stretched. “We therefore remain negative on aluminium names, with a 30–40% downside risk likely,” it added, while advising investors to sell any aluminium stock they may own. The domestic brokerage has a ‘Reduce’ call on NALCO and Hindalco Industries.
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