Aluminium exports surge 34% on higher output, fall in consumption

Aluminium exports from the country have recorded a sharp rise of 34.6 per cent year-on-year (yo-y) during April-January of 2017-18 on expanding domestic production and fall in internal consumption.

Exports of the white metal rose from 0.97 million tonnes to 1.3 million tonnes in the period.

Production of primary aluminium in April-February of last fiscal expanded by 5.8 per cent y-o-y from 1.58 million tonnes to 1.67 million tonnes.

"Domestic demand of aluminium has not kept pace with the rising production. This has led to surplus aluminium for exports. Further, exports of aluminium have turned lucrative due to robust global aluminium prices", said an industry source.

In April-February period of FY18, global aluminium prices strengthened by 22.4 per cent. Buoyant prices of aluminium have been supported by smelter capacity cuts in China where the government is cracking down on polluting industries. Aluminium smelter production cuts in China are expected to translate into closure of four million tonnes which is around 10 per cent of the country's total aluminium making capacity, says a report by Care Ratings.

The US government's recent decision to levy 10 per cent import tariff on aluninium is unlikely to shake up aluminium exports from India. Nalco, for instance, is insulated from the US imposed tariff barriers as it exports products mostly to South East Asia. The domestic players in 2016-17 exported barely 125,000 tonnes of aluminium to US, made up mostly by ingots. Volume of aluminium exports by India to US in miniscule compared to Canada, China and the Middle East countries.

India's share of aluminium imported by US in volume terms is a measly two per cent. On the contrary, Canada, China and Middle East account for an overwhelming 73 per cent of the total aluminium imported by US.

Indian aluminium exports to the US are valued at $350 million. This means the Indian producers have only 0.8 per cent share to the overall aluminium exports to the S of the order of $42.2 billion.

The worrying factor for the aluminium industry is the continuing rise in imports of aluminium, especially aluminium scrap. Imports now have a share of 53 per cent in the country's total aluminium consumption. Within the aluminium import basket, scrap accounts for 53 per cent of all imports in volume terms. The country has a nameplate capacity of 4.1 million tonnes in aluminium and this can meet 125 per cent of the country's aluminium demand of 3.3 million tonnes.

In the April-September period of FY18, overall aluminium imports rose eight per cent while scrap imports were up 16 per cent. Cumulatively since FY11, total aluminium imports zoomed by 100 per cent. Scrap imports, too, surged by 98 per cent in the same period.