India’s aluminium production to rise at 3.5% CAGR through 2020, CARE Ratings report suggests

Aluminium production in India is projected to rise at a compound annual growth rate (CAGR) of 3.5 per cent over the next 2-3 years fuelled by the rising domestic demand, according to a new report by CARE Ratings.

The report titled “Aluminium Industry: The Silver Knight of the Economy,” says that various central government initiatives like Smart Cities campaign along with ramping up of the existing aluminium smelter capacities would boost the overall output.  Owing to its low-cost advantage, surplus primary metal stock will continue to be exported earning foreign revenues for the country.

According to CARE, aluminium consumption growth in India is likely to be driven by the growth in electrical and power transmission, and automobile sector. Demand from the building and construction sector and consumer durable segment will remain subdued, while demand from the packaging sector will surge supporting domestic demand.

LME aluminium prices are expected to range at US$1,800 per tonne to US$2,000 per tonne in the short- to medium-terms, CARE estimated.

India is one of the lowest cost primary aluminium producers in the world, thanks to the easy availability of raw materials and cheap labour costs. The growing demand for the light metal in the last ten years, driven by a host of other positive macroeconomic factors, has resulted in capacity expansions at major Indian smelters.

With the addition of new aluminium capacities, India aims at not only to satisfy the rising domestic demand, but also playing a crucial role in the global aluminium market, CARE observed.