Aluminium output to grow by 10.7% in FY10: CMIE

India's aluminium production is expected to grow by 10.7 per cent this fiscal, the Centre for Monitoring Indian Economy (CMIE) said in its monthly review.

"Aluminium production is expected to grow by 10.7 per cent in FY10 on the back of the completion of various projects and healthy demand from the electrical power equipment and construction sectors," the CMIE report said.

Prior to December 2008, the primary aluminium industry was facing capacity constraint which was reflected in the less than five per cent monthly production growth.

With the completion of Vendanta Aluminium's 2.5-lakh tonnes smelter in Orissa, production grew by over 13 per cent in each month during December-March last fiscal.

This significantly boosted primary aluminium production in FY09 as it grew by 9.1 per cent to 13.48 lakh tonnes in line with CMIE estimates.

During FY09, copper production witnessed a trend reversal with production declining for the first time since a decade, by 9.1 per cent to 6.40 lakh tonnes, in line with CMIE estimates.

CMIE pointed out that the fall can be attributed to global shortage of copper concentrates that affected copper producers and kept their capacity utilisation levels low.

The smelter maintenance undertaken by the three main producers coupled with a fall in global demand further hampered production during the year.

While average aluminium prices at the London Metal Exchange rose by 6.4 per cent to $1,421 per tonne in April 2009 sequentially, LME copper prices spurted by 17.4 per cent to $4,407 per tonne from the previous month.

The rise in prices can be attributed to bulk buying from China's State Reserves Bureau (SRB).

"However, while China may be the reason for the rise in prices, it alone cannot sustain this rally unless we see a revival in global demand," CMIE said.