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Aluminium usage in auto industry gaining traction: Icra Research

A report by Icra Research shows the share of the automobile industry in domestic aluminium consumption has steadily grown from 16 per cent in 2008-09 to 25 per cent in 2017-18

Jayajit Dash  |  Bhubaneswar 

Nalco could change the way aluminium is used

Aluminium is gradually finding greater usage in the automobile industry fuelled by demand growth. At the end of June 2018, aluminium usage per unit of passenger and commercial vehicles stood at 29.21 kg, exceeding 29.04 kg at the end of FY18.

A report by shows the share of the automobile industry in domestic aluminium consumption has steadily grown from 16 per cent in 2008-09 to 25 per cent in 2017-18. Icra believes that vehicular weight reduction is a focus of the Indian automobile manufacturers to improve efficiency. This, in turn, would entail a higher per unit usage of aluminium, going forward. Consequently, aluminium demand growth from the automobile industry is likely to outpace the overall aluminium demand growth in the country, in line with the past trend but driven by not only higher number of vehicles produced, but also an increase in per unit aluminium consumption.

The increased demand from the automobile industry can be met either through recycling of higher quantity of imported auto grade scrap or production of primary auto grade alloyed aluminium. As on date, the alloying capacity of the domestic primary manufacturers remains limited because historically the primary manufacturers had set up capacities focusing on the T&D (transmission & distribution) sector, which do not require

“In our opinion, development and approval of products for the automobile industry is a time-consuming process due to strict quality control norms. Hence, import of auto-grade aluminium scrap would remain high, at least in the near to medium term. On the other hand, consumption growth of aluminium in the power T&D, packaging and construction sectors is likely to remain favourable, which would lead to increased quantity of primary aluminium being consumed by these industries”, Icra noted.

The increase in aluminium consumption is largely on the back of higher production of automobiles. Still, the average per unit aluminium consumption in India is much lower than the global average. Globally, 160 kg and 240 kg of aluminium is used in per unit of passenger and commercial vehicles respectively. By contrast, in India, the average quantity of aluminium used per vehicle remains as low as 29 kg per vehicle.

More than 60 per cent of the aluminium manufactured through the secondary route is consumed by the domestic automobile industry as against less than 10 per cent of the primary aluminium being used in manufacturing automobiles. Historically, demand for aluminium in India was driven by its usage in power T&D.

First Published: Wed, November 28 2018. 17:24 IST
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