Aluminium Getting Out of Step with Other Commodities’
YOUR VIEWS ON THE ALUMINIUM INDUSTRY... The worst is yet to get over. Of the 60 million tonnes global production, 30 mt are produced in China. Chinese GDP growth is the lowest in the last several years and this is having a major impact on aluminium prices like any other commodity. In such a case, only companies with lower cost will benefit. Russians gain as their costs are in rouble and earnings in dollars. WHEN DO YOU SEE THIS REVERSING? While lower GDP growth in China is a negative for aluminium, there are other positives coming out. We believe in 2016, globally demand will outstrip the supply. The sentiments are also strong at the moment. What we are seeing is that although there is a sell-off across commodities, aluminium has held firm. In fact, it has moved up 3% since end of November when the commodity index has fallen 13%. It appears to me that aluminium is getting out of step and it is a positive sign. CRU, a respected commodity watcher, is saying that inventory will change from 95 days at present to 72 days by 2020. This means demand is outstripping supply. All these tend to suggest that aluminium is getting out of step.
HOW IS HINDALCO NAVIGATING THIS DIFFICULT ENVIRONMENT?
We would like to get more dollars per tonne of aluminium. So, if I produce more value-added products, I get more dollars per tonne. That is why we have put up capacities which are value-added products that are imported today. Also, we are hedging our aluminium upstream business, which is very vulnerable to the LME (London Metal Exchange) prices, with the value-added products.
IS THERE ANY HOPE FOR A MINIMUM IMPORT PRICE FOR ALUMINIUM?
Aluminium is an important sector as it provides huge employment. In India, with seventh largest aluminium reserves, the industry can be a good support to the `Make in India' concept. It has the potential of going from 20 lakh tonne capacity to 41
WE WOULD LIKE TO GET MORE DOLLARS PER TONNE OF ALUMINIUM. SO, IF I
PRODUCE MORE VALUE-ADDED PRODUCTS, I GET MORE DOLLARS PER TONNE. THAT IS WHY WE HAVE PUT UP CAPACITIES WHICH ARE VALUE-ADDED PRODUCTS THAT ARE IMPORTED TODAY
lakh tonne capacity.
The aluminium association has made representation to the right people and I am sure appropriate action will be taken.
I have been told the debt of the industry is around ` 60,000 crore and there is a definite stress in the system. IS THERE ANY PLAN TO LIST US UNIT NOVELIS SEPARATELY? No. There is no such plan at the moment.