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IN - INDIAN ALUMINUM PRODUCTION TO RISE TO MEET DOMESTIC DEMAND, REPORT SAYS
India’s aluminum production is expected to grow at a compound annual growth rate (CAGR) of 3.5% in the next 2-3 years to cater to a rise in domestic demand, according to a new report.
CARE Ratings’ report titled “Aluminium Industry: The Silver Knight of the Economy,” said that what would propel this growth are the various initiatives taken up by the Indian government, and the ramping up of smelter capacities. Surplus stock will continue to be exported, owing to its low-cost advantage.
So what will drive the growth? According to CARE, the growth in consumption is likely to be driven by the growth in power transmission and the automobile sector. While the demand from the building and construction and consumer durable segment is likely to remain subdued, demand from the packaging sector is likely to support the domestic demand.
CARE has estimated the prices of LME aluminum to range around $1,800/ton to $2,000/ton in the short- to medium-terms.
India is among the lowest cost producers of aluminum in the world, owing to easy availability of raw materials and comparatively low labor costs. The growing demand for aluminum in the last decade, driven by India’s underlying growth story, has resulted in expansion of smelting capacities of the major domestic players.
With the addition of new aluminum capacities, India aims at not only satisfying domestic demand, but also playing a major role in the global aluminum market.
Aluminum Prices on the Rise
Prices of aluminum have shown recovery over the past financial year. One of the main reasons for this is due to measures taken up by the Chinese economy, as well as renewed sentiments toward the demand for aluminum.
Shutdown of illegal and polluting smelters, which will result in a cut in capacity, has also contributed to this surge. Also, producers in China are upgrading their production facilities. New smelting capacity growth in China is expected to slow down significantly due to supply-side restrictions. Aluminum prices will experience an upward trajectory due to an uptick in demand from the European markets as well, according to the CARE report.
Consumption of bauxite and alumina is also likely to move in tandem with the domestic aluminum production trend, the report predicted. However, any surplus production of alumina will lead to increasing alumina exports.
Due to the surge in LME aluminum prices from FY 2016-17 onward, aluminum industry producers are expected to have better realizations, which is a boon due to the recent rise in costs of production.
Indian Bauxite Plays a Role
India has 593 million tons of bauxite reserves and is naturally endowed with large deposits of gibbsitic bauxite. According to the Indian Bureau of Mines, there are a reported 152 mines, of which 134 operate in the private sector and 18 mines in the public sector. The abundant reserves of bauxite have made India a net exporter of bauxite. Bauxite is primarily used for the production of alumina, but is also used in refractories, abrasives, chemicals, aluminous cements, and miscellaneous products (like proppants).
India exports bauxites to China, Nepal, Saudi Arabia, France, Japan, Slovenia, the U.S., the U.K., Oman, Italy and Kuwait. China is the main importer of bauxites from India, at nearly 90% of total Indian bauxite exports. Imports are quite negligible in comparison to the exports — whatever little India imports comes from Guinea and Brazil.
Once the bauxite passes through the Bayer process of manufacturing, the finished product is alumina. Alumina is processed in the refinery plants. Metallurgical alumina is used for the manufacturing of aluminum.
India ranks fourth in terms of production of alumina and produces 5% of the world alumina (China leads in terms of alumina production). The CARE report said domestic alumina production is increasing at a growth rate of 13.7% CAGR from FY 2012-13 to FY 2016-17. In terms of production there has been an 8.4% year-over-year increase from FY 2015-16 to FY 2016-17. Most of the alumina produced is used for domestic consumption — that is, by the respective companies which manufacture it, for the manufacturing of aluminum metal. The surplus alumina is exported.
The end product, once alumina is passed through the Hall-Heroult process, is aluminum. Primary aluminum, which is initially in liquid form, is casted into extrusion ingots, sheet ingots or foundry alloys, depending on how it will be used.
Primary Aluminum Production
India ranks fourth in terms of primary aluminum production, while China continues to be the largest producer of aluminum, contributing 54% of total global production. China is also one of the major consumers of primary domestic aluminum production, growing at a CAGR of 13% from FY 2012-13 onward.
India exports the surplus stock mainly to South Korea, Malaysia, Mexico, Italy, Turkey, the U.S., Taiwan, Spain, Japan, Indonesia, Bangladesh, Singapore, Brazil and the Netherlands. South Korea accounts for approximately 38% of Indian primary aluminum exports.
Source: MetalMiner
CARE Ratings’ report titled “Aluminium Industry: The Silver Knight of the Economy,” said that what would propel this growth are the various initiatives taken up by the Indian government, and the ramping up of smelter capacities. Surplus stock will continue to be exported, owing to its low-cost advantage.
So what will drive the growth? According to CARE, the growth in consumption is likely to be driven by the growth in power transmission and the automobile sector. While the demand from the building and construction and consumer durable segment is likely to remain subdued, demand from the packaging sector is likely to support the domestic demand.
CARE has estimated the prices of LME aluminum to range around $1,800/ton to $2,000/ton in the short- to medium-terms.
India is among the lowest cost producers of aluminum in the world, owing to easy availability of raw materials and comparatively low labor costs. The growing demand for aluminum in the last decade, driven by India’s underlying growth story, has resulted in expansion of smelting capacities of the major domestic players.
With the addition of new aluminum capacities, India aims at not only satisfying domestic demand, but also playing a major role in the global aluminum market.
Aluminum Prices on the Rise
Prices of aluminum have shown recovery over the past financial year. One of the main reasons for this is due to measures taken up by the Chinese economy, as well as renewed sentiments toward the demand for aluminum.
Shutdown of illegal and polluting smelters, which will result in a cut in capacity, has also contributed to this surge. Also, producers in China are upgrading their production facilities. New smelting capacity growth in China is expected to slow down significantly due to supply-side restrictions. Aluminum prices will experience an upward trajectory due to an uptick in demand from the European markets as well, according to the CARE report.
Consumption of bauxite and alumina is also likely to move in tandem with the domestic aluminum production trend, the report predicted. However, any surplus production of alumina will lead to increasing alumina exports.
Due to the surge in LME aluminum prices from FY 2016-17 onward, aluminum industry producers are expected to have better realizations, which is a boon due to the recent rise in costs of production.
Indian Bauxite Plays a Role
India has 593 million tons of bauxite reserves and is naturally endowed with large deposits of gibbsitic bauxite. According to the Indian Bureau of Mines, there are a reported 152 mines, of which 134 operate in the private sector and 18 mines in the public sector. The abundant reserves of bauxite have made India a net exporter of bauxite. Bauxite is primarily used for the production of alumina, but is also used in refractories, abrasives, chemicals, aluminous cements, and miscellaneous products (like proppants).
India exports bauxites to China, Nepal, Saudi Arabia, France, Japan, Slovenia, the U.S., the U.K., Oman, Italy and Kuwait. China is the main importer of bauxites from India, at nearly 90% of total Indian bauxite exports. Imports are quite negligible in comparison to the exports — whatever little India imports comes from Guinea and Brazil.
Once the bauxite passes through the Bayer process of manufacturing, the finished product is alumina. Alumina is processed in the refinery plants. Metallurgical alumina is used for the manufacturing of aluminum.
India ranks fourth in terms of production of alumina and produces 5% of the world alumina (China leads in terms of alumina production). The CARE report said domestic alumina production is increasing at a growth rate of 13.7% CAGR from FY 2012-13 to FY 2016-17. In terms of production there has been an 8.4% year-over-year increase from FY 2015-16 to FY 2016-17. Most of the alumina produced is used for domestic consumption — that is, by the respective companies which manufacture it, for the manufacturing of aluminum metal. The surplus alumina is exported.
The end product, once alumina is passed through the Hall-Heroult process, is aluminum. Primary aluminum, which is initially in liquid form, is casted into extrusion ingots, sheet ingots or foundry alloys, depending on how it will be used.
Primary Aluminum Production
India ranks fourth in terms of primary aluminum production, while China continues to be the largest producer of aluminum, contributing 54% of total global production. China is also one of the major consumers of primary domestic aluminum production, growing at a CAGR of 13% from FY 2012-13 onward.
India exports the surplus stock mainly to South Korea, Malaysia, Mexico, Italy, Turkey, the U.S., Taiwan, Spain, Japan, Indonesia, Bangladesh, Singapore, Brazil and the Netherlands. South Korea accounts for approximately 38% of Indian primary aluminum exports.
Source: MetalMiner
