ICRA suggests aluminium producers to focus on the export market

The ICRA declared that to ensure healthy capacity utilization of the newly commissioned greenfield projects, primary producers will need to focus on the export markets.

The energy costs remain a key factor in the primary aluminium production and since the Supreme Court de-allocated some of the coal blocks that were earlier assigned to the greenfield projects, the concern has become more potent. The energy-intensive smelters need to look for viable alternate sources to ensure economic aluminium production, said ICRA.

In the period between April and September, 2014, India’s primary aluminium production jumped by 5.6% as realizations improved and the price of some key consumables softened. However, if the producers are not able to secure feasible coal blocks, the cost of production will rise. As a result, aluminium producers are expected to be aggressive bidders for the coal blocks.

The current domestic capacity is higher than the annualized consumption of 2.10 MMT in H1FY2015, standing at 2.76 MMT taking into account that there are large greenfield projects poised for commissioning.