Aluminium exports jump 36% on high global demand

Aluminium exports from the country increased 36 per cent in 2017-18, aided by global demand, which outstripped supply.

A spurt of 21 per cent in the commodity’s prices on the London Metal Exchange (LME); US sanctions on UC Rusal, one of the largest producers; and over-supply to the domestic market helped exports to rise in the last fiscal year and the trend is expected to continue in in 2018-19.

Figures of the Union commerce and industry ministry show in volume terms aluminium exports rose from 1.22 million tonnes (mt) at the end of 2016-17 to 1.66 mt in 2017-18.

In the comparable period, imports of the white metal tanked 14.7 per cent to 360,000 tonnes.

South Korea accounted for the largest export of Indian aluminium products (31 per cent), followed by Malaysia (30 per cent) and the US (11 per cent).

An industry analyst said the uptrend in aluminium exports would continue in this fiscal year too. “Indian aluminium manufacturers can tap the global markets beyond the US for aluminium and alumina exports. Global aluminium markets will face an under supply, given the current geopolitical context where sanctions continue on Russia’s UC Rusal, the biggest producer of the metal outside China,” he said. 2015-16 2016-17 2017-18

India's production of primary aluminium grew 21 per cent year-on-year (y-o-y) in the last fiscal year, going past the 15.5 per cent rise in 2016-17.

The rise in aluminium production was on account of better operational efficiencies owing to enhanced capacity utilisation at existing smelters. During 2017-18, Vedanta expanded the capacity of its potlines at the Jharsuguda and BALCO smelters (Chhattisgarh).

The country's primary aluminium production was 3.39 million tonnes in 2017-18 while consumption was 2.08 million tonnes. According to a report by CARE Ratings, India's aluminium production is forecast to be stable at 3.42 million tonnes in this fiscal year.

Primary aluminium producers were buoyed by unprecedented price swings on the LME. LME prices peaked at a seven-year high in April soon after the US government put sanctions on UC Rusal.

Prices of aluminium surged by 21 per cent in 2017-18 to average $2,045 per tonne. Aluminium prices were also strengthened by a rise in input costs as prices of key ingredients 0.82 1.22 1.66 (Figure in mn tonnes) 2.42 3.39 0.42 0.36 such as alumina, caustic soda, petroleum coke and coal tar pitch shot up during the period.

Aluminium prices had been moving up since December last year after the Chinese government cracked down on polluting smelters. Later, prices came down after the US treasury announced a 10 per cent levy on imported aluminium.

However, aluminium rebounded in the beginning of 2018-19 with the US announcing sanctions on UC Rusal, the second-largest producer of aluminium (outside China), accounting for 6 per cent of the global production. The protectionist duties imposed by the US created fears of shortage in global supplies.

According to a report by CARE Ratings, India's aluminium production is forecast to be stable at 3.42 million tonnes in this fiscal year.

However, imports, especially of aluminium scrap, continue to nettle Indian producers. Scrap imports recorded a spurt of 20.4 per cent in 2017-18 to 1.12 million tonnes. A low import duty of 2.5 per cent is driving imports.