Novelis Brazil unit aims big expansion in export markets

Novelis’ Brazilian unit has decided to concentrate more on export markets, in an attempt to offset declining demand growth in domestic market. According to Tadeu Nardocci, President-South American operations, Novelis, the company plans to expand its presence in the export markets of South America and Africa, where the company already exports aluminum sheet and coils.

As per the company, depreciation of Brazilian currency against the dollar will favor exports out of the country. Currently, the local currency is valued at Real 3.10/$1. The increased exports will help the company achieve greater competitiveness. In addition, it will also complement Novelis’ portfolio in the US, Mexico and some African countries.

The company notes that domestic demand for rolled aluminum has plunged heavily in Brazil during the past several months. During the initial months of the current year, the consumption of aluminum sheet has witnessed sharp fall of nearly 15%, mainly on account of declining demand from automotive and construction sector. In addition, the company has been facing tough completion from rising imports of processed aluminum from China. Under such circumstances, export boost has become vital for the company. Further, the company has also decided to reinforce firm relationships with major importers.

Novelis aims to cut costs by 25% over the next three years. The recently concluded investment at Pindamonhangaba mill is likely to raise production capacities significantly. The company has also doubled its recycling capacity, which may also contribute to low-cost production. It must be noted that the company had idled operations at Ouro Preto smelter due to rising production costs.

The country has produced 334,000 mt of primary aluminum during Jan-May ‘15, nearly 30% lower when compared with the production during the corresponding period last year. The production in 2014 had dropped to less than 1 million mt for the first time since 1990. Novelis expects the Brazilian primary aluminum output to fall to 750,000 mt in 2015.