As imports surge, aluminium companies look to widen export volumes

The country's aluminium makers are looking to ramp up their volumes of exports shipments amid unabated imports of scrap and some finished downstream products. 

As of now, imports' share has grown to 60 per cent of the country's aluminium consumption, unnerving the domestic producers. With a trade war simmering between the US and China, Indian aluminium makers expect imports to swell further. 

“Both US and China are protecting their economies by hiking custom duties. Due to the trade war, there has been a huge spike  in imports of aluminium, especially scrap, into the country. Scrap from US are finding their way into India. Indian aluminium has to find takers abroad as share of imports is expanding. The producers should aim to expand footprint in Japan, South East Asian countries, Central Asia and even the EU (European Union)”, said T K Chand, President, Aluminium Association of India (AAI) and Chairman cum Managing Director at National Aluminium Company (Nalco).

In the April-June quarter, aluminium exports from the country shot up by 16 per cent as global markets battled a deficit of the metal, while domestic markets were oversupplied due to a spike in imports. South Korea was the biggest recipient of Indian aluminium cargo, with a share of 18 per cent. Turkey came next with an uptake of 16 per cent of the shipments, followed by Mexico (13 per cent), Italy (seven per cent), USA (six per cent) and Japan (five per cent).

Aluminium producers were constrained to ship their production overseas as imports ate into their share. During April-July, scrap imports have moved up 23.3 per cent, rising from 0.33 million tonnes (mt) to 0.41 mt.

Overall imports in aluminium have risen 19 per cent year-on-year in the April-June quarter. The imports have been driven by higher volumes of scrap imports precipitated by China’s imposition of import duty on US scrap. China’s protectionist levies have spelt unexpected trouble for the primary aluminium producers. Apart from scraps, the rising trend in imports of wire rods and alloy ingots from the Association of South East Asian Nations (ASEAN) countries having free trade agreements (FTAs) with India has roiled the domestic products. According to an industry data, wire rod inflows from the FTA nations into India, has zoomed 200 per cent in the period under review.

Amid rising threat of imports, the domestic producers have demanded the complete exclusion of aluminium from the purview of negotiations of Regional Comprehensive Economic Partnerships (RCEP). The RCEP is a bloc of 10 ASEAN Group members- Brunei, Cambodia, Indonesia, Malaysia, Myanmar, Singapore, Thailand, Philippines, Laos & Vietnam and their six FTA partners- India, China, Japan, South Korea, Australia and New Zealand. India has a trade deficit (difference between imports and exports) with 10 of these countries- China, South Korea and Australia included. 

The Aluminium Association of India (AAI) has requested for QR (Quantitative Restriction) in imports. In addition, AAI has called for the abolition of inverted duty structure on caustic soda & also GST input credit for energy cess as aluminium is an
energy-intensive industry. Moreover, the association has urged the government to include aluminium industry in the core industry

“Rising import has forced domestic producers to sell at lower prices in the market. Profitability has been severely hit especially in the downstream business which has seen continued and rising losses as import of value-added downstream products continued to increase from China”, said an industry source.

Though production of primary aluminium has logged 11 per cent CAGR (compounded annual growth rate) between FY11 and FY18, imports in the period have grown 12 per cent. In the period, the share of primary producers has shrunk from 60 per cent to 46 per cent.