Aluminium producers fret as imports surge in Q1

Import reached 60 per cent of domestic aluminium consumption in the first quarter (April-June) of this financial year, up from 54 per cent at the end of 2017-18. Overall import rose 19 per cent yearon-year in the quarter.

There was more of scrap import, precipitated by China’s imposition of import duty on US scrap. China’s protectionist levies have spelt unexpected trouble for primary aluminium producers. Scrap import rose 24 per cent in the quarter. From the US alone, this rose into India by 128 per cent.

Apart from scrap, there is a rising trend in import of wire rods and alloy ingots from the Asean trade bloc, with which India has a free trade agreement (FTA). According to industry data, wire rod inflow from the FTA nations zoomed 200 per cent in the period.

“India needs to protect its domestic market against rising import. The Aluminium Association of India (AAI) has requested for QR (Quantitative Restriction). In addition, for abolition of the inverted duty structure on caustic soda and GST (goods and services tax) input credit for energy cess, as aluminium is an energy-intensive industry. We also want aluminium to be considered (in official definitions) as part of core industry,” said T K Chand, chairman and managing director of National Aluminium Company (Nalco) and president at AAI. “We also want higher duty on import of aluminium end-use products, to protect thousands of secondary producers.”

“Rising import has forced domestic producers to sell at lower prices. Profitability has been severely hit, especially in the downstream business, as import of value-added products continued to increase from China,” said an industry source.

Further, the domestic aluminium industry is jittery over the US government’s levy of 167 per cent antidumping duty on downstream products sourced from China. Aluminium demand in the domestic market continues to improve; it grew 10 per cent year-on-year to 0.92 million tonnes (mt).

“India is highly vulnerable to heightened dumping from China in the wake of the latest developments and the effects are already visible. There is a case for immediate government intervention to arrest this and aluminium should be completely excluded from RCEP (Regional Comprehensive Economic Partnership) negotiations,” said the industry source cited above.

Though production of primary aluminium grew at a 11 per cent compound annual growth rate between FY11 and FY18, import in the period rose 12 per cent annually. In the period, the share of primary producers shrank from 60 per cent to 46 per cent.

The Aluminium Secondary Manufacturers’ Association, however, said there was no strong case for restricting scrap import.

“India imported 0.86 mt in 2014-15, which increased to 1.11 mt in 2017-18 — an increase of 29 per cent in three years is nothing alarming and justified for a fastgrowing economy. Scrap is mainly used for making alloy ingots, mostly used by the automobile industry; world over, alloy ingots are made by using scrap only,” it had said to a previous questionnaire from Business Standard.