Auto sales to drive India's aluminium demand growth

After a few years of lull, Indian aluminium industry is finally getting to experience a decent rise in consumption. Indian aluminium majors see the demand charting a double-digit growth in the current financial year, buoyed by automobile growth and enhanced industrial activity. Factors like increasing public investment in massive infrastructure and power sector reforms and unprecedented rural demand are also being viewed as key growth drivers.

“Indian demand is expected to witness a strong double-digit growth following the steps taken up by the government to boost industrial production, its investment in infrastructure and its thrust on power sector reforms. Good monsoons are expected to boost rural demand,” noted a Hindalco spokesperson in a recent analyst review.

Prior to this, TK Chand, Chairman of the National Aluminium Company Ltd.'s (Nalco) had also attributed India's aluminium demand growth to the rise in auto sales in the country.
 

Globally, aluminium demand is on the rise. This has been the trend despite the recent slowdown in aluminium market which was fuelled by excess aluminium shipments from China resulting in a global glut. Of late, aluminium prices on London Metal Exchange have improved slightly barring a few incidents of occasional volatility. This has been made possible mainly due to four million metric tonnes of production cuts that took place last year, comprising largely of high-cost capacities.

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“The Chinese demand has witnessed a strong recovery, which is surprising on the positive side. Buoyancy in the property market, infrastructure investment following stimulus and tax rebates and automobile industry have helped the demand pickup,” the Hindalco spokesperson added.

The 3-months Buyer price of aluminium on LME currently stands at US$1,699.50/mt and 3-months Seller price is at US$1,700/mt. Primary producers are of the view that the figures would improve further.