Aluminium exports rise 16% in April-June on global supply constraints

International prices of aluminium firmed up by 18.3% year-on-year in Q1 of FY19

Aluminium exports from the country shot up by 15.9 per cent in the April-June quarter as global markets continued to grapple with deficit of the metal. The exporters were also helped by an oversupply in the domestic market. 

The uptrend in aluminium exports observed in the last financial year has spilled over to FY19 as well. In 2017-18, aluminium exports logged 36 per cent growth as global demand for the white metal outpaced supplies. In volume terms, aluminium exports increased from 1.22 million tonnes (mt) to 1.66 mt in the last financial year. 

In the April-June period of the current financial year, 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).  

An industry source said, "The share of imports to the country's total aluminium consumption is steadily growing, prompting the producers to ship the product overseas. Last financial year, aluminium imports inclusive of scrap grew sharply to reach 1.96 mt, representing CAGR (compounded annual growth rate) of 12 per cent since FY11. Imports had a share of 54 per cent in the country's total consumption in FY18."

Aluminium exporters were helped by better price realisation in the global markets. International prices of aluminium firmed up by 18.3 per cent year-on-year in Q1 of FY19. The imposition of US sanctions in April on UC Rusal, the biggest aluminium maker (ex-China), caused a rally in global prices, sending the markets into a tizzy over mounting supply concerns. Moreover, the embargo faced by Norsk Hydro's Alunorte refinery in Brazil will throttle supplies of alumina, the key raw material for aluminium manufacturing. The refinery at Alunorte is the largest in the world with a capacity to produce 6.3 mt each year but is barely operating at about 50 per cent of the rated capacity due to curbs imposed by the local pollution control authorities. And, with Brazil headed for elections in October, industry watchers are not hopeful of the Alunorte refinery reaching its peak output anytime soon. 

A research report by CARE Ratings says Indian producers have the opportunity to expand both aluminium and alumina exports in the global markets.

"EU (European Union) is expected to generate robust demand driven by transport and construction sectors. China is focusing on increasing the intensity of aluminium usage in electric vehicles, which will generate additional demand for aluminium in China," the report read.

The forecast for global aluminium prices is bullish. Prices are anticipated to hover in the band of $2100-2200 per tonne on the London Metal Exchange (LME) during the short to medium term. The sentiment on prices is also expected to be buoyed by China, which prepares for a winter shutdown later this year to curb pollution. 

India's primary aluminium production moved up 18.2 per cent year-on-year to 0.91 mt during April-June on the back of better operational efficiencies and improved capacity utilisation at existing smelters by the producers. Domestic consumption, too, was upbeat, recording 15.1 per cent increase in the period. The government's push for smart cites, rural electrification, focus on building renewable energy projects and growth in the transportation sector is driving aluminium consumption.