India’s requirement for aluminium intensifies amidst global economic crisis and dismay

India is the only country that stands out from the rest of the world regarding aluminium production and consumption amidst a down market projecting a slow recovery in 2023. The government's strong emphasis on new infrastructure, particularly green energy, drives domestic consumption and overall stability for aluminium prices.

India is currently the second-largest aluminium producer and third-largest consumer globally. However, industry analysts predict that India's aluminium demand will double within the next ten years, which could significantly impact both short-term and long-term aluminium price projections.

Despite slowing global growth, including in China, which is expected to lower demand and pull down aluminium prices, experts believe that there are no such apprehensions in India. In fact, many predict that the LME aluminium spot price may drop by as much as 13 per cent year-on-year in 2023, putting prices at around US$2365 per tonne.

According to a Hindalco executive, Nilesh Kaul, India is poised to increase its metals consumption, following in the footsteps of China. While India's current per capita aluminium consumption is only 3 kg, compared to China's impressive 31.7 kg and the rest of the world's average of 12 kg, Kaul believes that demand for this "green" metal in India could rise to 9 million tonnes by 2033. This would represent a significant increase from the current 4.5 million tonnes, although India currently only accounts for 5 per cent of global aluminium output.

India's government has emphasized infrastructure, particularly through initiatives such as "Make in India," which is likely to increase demand for aluminium in the power and construction sectors. Despite lagging global aluminium markets due to events such as Russia's invasion of Ukraine and the COVID-19 pandemic, India has seen a turnaround in the aluminium industry thanks to domestic projects like the "Vande Bharat" trains, metro rail development and increased capacity for green power generation.

Many experts in India believe that the transportation industry will drive the demand for aluminium as the shift to "green energy" in public and private transportation continues to replace fossil fuel vehicles with electric vehicles. This trend will significantly increase the use of aluminium in the production of lighter vehicles. Additionally, India's economic growth and development, including urbanization, housing, and public infrastructure, will further increase the country's aluminium consumption as it transforms into a magnificent world economy.

Recently, ICRA, a renowned rating agency, unveiled a report forecasting a 9 per cent growth in the demand for aluminium in India over the next two fiscal years. Based on their analysis, this expansion is expected to outpace the global rate of aluminium demand. The automotive sector has been identified as a crucial factor driving India's aluminium consumption, with steady demand projected in the following fiscal years. This is primarily due to the shift towards electric vehicles by consumers.

Furthermore, India's aluminium exports have experienced a consistent increase in recent years. The country ranks seventh globally in terms of reserves for raw material bauxite. The government has established the National Mineral Exploration Trust to promote aluminium production and provide its industries with the necessary volume of raw materials. Additionally, India holds vast bauxite reserves on its east coast, which remain untapped to this day.