India’s primary aluminium exports up 21 per cent in H1 FY 2019; primary producers focus on export market for revenue

India’s primary aluminium exports have recorded a 21 per cent increase in H1 (April-September period) of FY 2018-19.

Industry data shows that in HI of FY 2018-19, exports of aluminium ingots reached 772,000 tonnes in volumes, up from 638,000 tonnes in the corresponding period of the last financial year. Primary producers maintain that exports have been driven by a consistent increase in imports of primary and fake semis. They hold that it has not been driven by the US-China trade war.

Aluminium Secondary Producers Association ASMA claimed that the tariffs benefitted Indian primary producers exporting a huge quantity of aluminium billets and ingots. But, primary producers say that after the trade conflict, the country's aluminium exports have slowed to nine per cent.

"The trade war and sanctions of Rusal has opened many newer avenues to them to export metal in other countries where premiums are much higher than MJP (Main Japanese Ports) and also better exports benefits” ASMA said.

As defended by the primary producers, imports' share has grown to 60 per cent of the country's aluminium consumption in the first half of FY 2018-19. This has created a concern among the domestic primary producers. The country's aluminium producers ramped up their volumes of exports shipments as imports ate into their domestic share. It is to be noted that imports of primary aluminium has not registered a rise. It was the import of semis and scraps that created a concern.

Industry data said that India’s aluminium consumption between April and October 2018 rose 14 per cent YoY.  The incremental domestic demand of 286,000 tonnes was overwhelmingly met by imports of 267,000 tonnes.  According to the department of commerce, a total of 177,737 tonnes of alloyed and non –alloyed aluminium ingots were imported by India from April to September FY 2018-2019. Primary producers also claimed that fake semis imports from China increased 14 times to 68,000 tonnes in April-October FY 2018-19 compared to the same period of FY2017-18. Primary producers claimed that imports of fake semis and downstream products from China have increased 62 per cent year-on-year during April-October.

“Indian aluminium has to find takers abroad as share of imports is expanding. The producers should aim to expand footprint in Japan, South East Asian countries, Central Asia and even the EU (European Union)”, said T K Chand, President, Aluminium Association of India (AAI) and Chairman cum Managing Director at National Aluminium Company (Nalco).

While the US-China trade tussle has not impacted premiums for the primary producers, the 10 per cent tariff on all aluminium products imported into the US has hurt the Indian exporters as well.

“This has been a serious threat for the domestic industry, which invested heavily into upstream capacity over the last few years. Thus, it is left with no choice but to export its surplus production," an industry source said commenting on the import share of 60% in the aluminium market.

Production, too, moved up in line with demand at 14 per cent. According to Care Ratings, domestic primary aluminium production in the first quarter of FY 2018-19 stood at 915 thousand tonnes, a rise of 18.2% YoY. However, it has merely raised the export rather than boosting downstream production or production of import substitutes.