According to a recent survey data shared by CRISIL Research, the aggregate consumption of recycled aluminium in India has surged because of low cost. While the usage of primary aluminium has logged a compound annual growth rate of 3.5 to 4 per cent in the last three years through fiscal 2019, that of recycled aluminium increased at a robust 17 to 18 per cent.
As a result, the share of recycled aluminium in aggregate aluminium market in India, according to CRISIL Research survey, stands at 34 per cent as of fiscal 2019, up 800 basis points (bps) from 26 per cent three years ago. This is in line with the global trend, though the proportion is much lower compared with developed economies.
Recycled aluminium offers better cost economics, said the report. For instance, the manufacture of ADC-12 aluminium alloy with recycled aluminium in 15 to 20 per cent cheaper than made with primary aluminium.
Also, there is a healthy demand for non-ferrous casting from the automotive sector that leads to 65 per cent of recycled aluminium consumption in India. The demand in the building and construction sector, which consumes 10 to 15 per cent of overall recycled aluminium, has increased as well with penetration of recycled extrusions.
Senior Director at CRISIL Research Prasad Koparkar pointed out “Demand for recycled aluminium has outpaced primary aluminium demand by 2.3-2.4 times over the last five years, led by better cost-economics, especially in the price-sensitive automotive castings space. This, in turn, has led to a surge in scrap imports, which soared to 1.35 million tonne in fiscal 2019, up from 0.7 million tonne in fiscal 2014, due to limited availability of optimum quality of scrap in domestic market.”
Higher share of imported scrap at 85 to 90 per cent as compared to domestic scrap could be large because of the lack of efficient ecosystem in India for scrap collection, segregation, and processing facilities, noted the report.
Also, the higher consumption of aluminium scrap in the domestic market has bolstered the increasing share of exports in primary aluminium production to 52 per cent in fiscal 2019 from 33 per cent in fiscal 2015. In fiscal 2019, Asia accounted for 47 per cent of India’s primary aluminium exports, followed by Europe with 29 per cent share.
For fiscal 2010, CRISIL estimates primary aluminium exports to be range-bound at around 1.9 million tonnes. The demand in the domestic market is also expected to be slow at 4 to 5 per cent given tepid ordering from PGCIL and slowdown in automotive segment.
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