State-owned Mecon recommends minimum import price on India's primary aluminium

<p>After consulting domestic aluminium manufacturers, state-run engineering consultant Mecon Ltd in a recent report submitted to the ministry of mines has recommended imposition of minimum import price (MIP) on primary aluminium to guard the industry against cheap imports. <br /><br />InfraCircle on 25 October reported about the Aluminium Association of India&mdash;a lobby group with firms such as Vedanta Ltd, Hindalco Industries Ltd and National Aluminium Co. Ltd (Nalco) as members&mdash;hiring Mecon to prepare a report to explore the possibility of introducing MIP on aluminium products. <br /><br />&ldquo;We have recently received a report from Mecon in which it says that MIP shall be imposed on primary aluminium as cost of production of domestic aluminium manufacturers is higher than the London Metal Exchange (LME) prices. We are currently examining the report,&rdquo; said a senior government official requesting anonymity.<br /><br />Another government official, who also did not want to be named, said the consultancy firm will also be submitting a report regarding imposition of MIP taking into account the interests of the downstream industry.<br /><br />&ldquo;The consultancy firm held consultations with more than 30 downstream players regarding introduction of MIP on aluminium, as it can&rsquo;t be ignored, before reaching to a holistic conclusion. It will submit the report in a month&rsquo;s time,&rdquo; said the second official quoted above, adding that the mines ministry will go through the entire report and take a decision thereafter.<br /><br />{googleAdsense}<br /><br />According to a newswire Press Trust of India report on 2 November, mines secretary Balvinder Kumar said the government may soon come out with a decision on duty protection measure for the domestic aluminium sector which is facing dumping of products from countries such as China. He also indicated the measure could be either through anti-dumping duty or any form of safeguard duty.<br /><br />The development comes at a time when India&rsquo;s ministry of commerce and industry has ruled out imposing MIP on aluminium, saying the World Trade Organization non-compliant measure will tarnish the country&rsquo;s image globally. The ministry of mines had also favoured the stand and stressed for completion of pending investigations of safeguard duty and anti-dumping investigations on unwrought aluminium.<br /><br />Unwrought aluminium is extracted from primary metal or scrap. India imports it from various countries such as the United Arab Emirates, Malaysia, Russia, South Africa, Oman, Qatar, Bahrain and Thailand.<br /><br />Queries emailed to the spokespersons of the ministry of mines and Mecon on 15 November remained unanswered. Experts, however, doubt that there is a case for MIP on aluminium as prices have firmed up.<br /><br />&ldquo;From the lows of $1400-1500 per tonne, prices of aluminium have recovered significantly this year. The improvement has been led by production cut in China during the first half of the current financial year and currently aluminium prices at LME is hovering at around $1700 per tonne,&rdquo; said Jayanta Roy, senior vice-president at ICRA Ltd, a rating agency.<br /><br />India&rsquo;s annual consumption of aluminium is 3 million tonne (MT) and production capacity is 4 MT. Nearly half the consumption is met by imports, mainly from China. On 15 November, aluminium price on LME was at $1,760 per tonne.</p>