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Indian aluminium industry is passing through the worst phase of crisis due to weak demand and diminishing prices for finished goods as a result of global recession. The uncontrolled import of cheap aluminium scrap has worsened the problem. Ramesh Nair, Chief Executive Officer (CEO) of Vedanta-controlled Bharat Aluminium Company (Balco) Limited, talks to R Krishna Das about the gravity and impact of the problem.
How serious is the issue of imported aluminium scrap in India?
The Indian aluminium industry has seen a huge increase in the import of scrap primarily from the West Asia and China in recent years. In 2011, the figure was 881000 tonnes that had now increased to 1.6 million tonnes. The price of the aluminium scrap coming from West Asia and China is much lower than the price of virgin aluminium produced by the Indian manufacturers. Buyers of virgin aluminium are turning towards aluminium scrap that is yielding good returns. The impact can be clearly seen in the Indian aluminium industry.
What kind of impact?
The market share of Indian aluminium producers dropped sharply from 60 per cent in 2011 to 45 per cent in the current financial year. The domestic aluminium demand grew at compounded annual growth rate of six per cent since 2011 but the opportunity has been encased by other countries at the cost of Indian producers. The imports during the same period grew at 16 per cent while Indian primary producers’ domestic sales showed a negative growth of one per cent.
Balco is already reeling under coal crises. How do you see the new problem?
We have received a big jolt in the business of rolled product that is made after melting aluminium. While the aluminium scrap imports in the country had recorded an increase of 83 per cent in last four years, Balco’s domestic sale went up by just seven per cent over the same period. The action should be taken without further delay to save the Indian aluminium industry and millions of people employed in different facilities across the country.
Is there any solution to the problem?
The only remedy to reduce scrap imports in India and increase the sale of domestic aluminium producers is to increasing import duty on scrap. The government can impose the anti-dumping duty on aluminium scrap as it has done in the case of steel. The Aluminium Association of India had raised the issue and demanded rationalization of import duty structure in the larger interest of domestic aluminium producers. The association had written a letter to the ministry of finance in this connection last month.
How serious is the issue of imported aluminium scrap in India?
The Indian aluminium industry has seen a huge increase in the import of scrap primarily from the West Asia and China in recent years. In 2011, the figure was 881000 tonnes that had now increased to 1.6 million tonnes. The price of the aluminium scrap coming from West Asia and China is much lower than the price of virgin aluminium produced by the Indian manufacturers. Buyers of virgin aluminium are turning towards aluminium scrap that is yielding good returns. The impact can be clearly seen in the Indian aluminium industry.
What kind of impact?
The market share of Indian aluminium producers dropped sharply from 60 per cent in 2011 to 45 per cent in the current financial year. The domestic aluminium demand grew at compounded annual growth rate of six per cent since 2011 but the opportunity has been encased by other countries at the cost of Indian producers. The imports during the same period grew at 16 per cent while Indian primary producers’ domestic sales showed a negative growth of one per cent.
Balco is already reeling under coal crises. How do you see the new problem?
We have received a big jolt in the business of rolled product that is made after melting aluminium. While the aluminium scrap imports in the country had recorded an increase of 83 per cent in last four years, Balco’s domestic sale went up by just seven per cent over the same period. The action should be taken without further delay to save the Indian aluminium industry and millions of people employed in different facilities across the country.
Is there any solution to the problem?
The only remedy to reduce scrap imports in India and increase the sale of domestic aluminium producers is to increasing import duty on scrap. The government can impose the anti-dumping duty on aluminium scrap as it has done in the case of steel. The Aluminium Association of India had raised the issue and demanded rationalization of import duty structure in the larger interest of domestic aluminium producers. The association had written a letter to the ministry of finance in this connection last month.
