News and Events

Business Standard reported that realisations of domestic primary aluminium producers are expected to drop in FY19 as increased imports are compelling producers to export at not so attractive prices. A top official with one of the primary aluminium producing companies told Business Standard that “We had never anticipated such a glut of imports and hence had not tied up long-term contracts overseas. Due to this, we have to sell aluminium in spot market overseas. Since spot has its own vagaries, one may not get best realisations in that market each time.” The official said that “This year, we are exporting more than 50 % of our aluminium production as consumers are getting material at a much cheaper rate which no domestic primary producer can match. Roughly half the consumption is being met via import route mainly through aluminium scrap.” Currently, capacity utilisation levels of domestic primary aluminium industry stands close to 90 per cent. Aluminium is a continuous producing industry, which is power intensive, and, hence, dropping of utilisation levels to bring it in line with domestic consumption also comes at a cost. A quick ramp-up and ramp-down is, therefore, not possible. The official said that “The worrisome factor is the degrowth which we are going to see in first half of this year in sales of primary producers. It could be double digit degrowth in sales this year. I do not recollect such a scenario in last three to five years.” Mr Satish Pai, managing director, Hindalco Industries, had informed at a select media meet recently that “India has very high power costs and also has cess on coal among other taxes which makes cost of production expensive as against Canada or Norway which have the lowest cost of production. There is a difference of USD 200 per ton between Hindalco aluminium and an efficient aluminium smelter in China.” Domestic aluminium consumption during April-June dropped 5 % sequentially at the time when imports increased more than 10 %, said industry officials. Imports in India for aluminium, including scrap, was 182,000 tonne in April 2018 compared to 154,000 tonne in April 17, an increase of 19 %. Out of this scrap imports were 103,000 tonne in April 18 compared to 78,000 tonne in April 2017 showing an increase of 32 %. Source : Business Standard