Aluminium manufacturers in India have revised their target growth for 2002-03 to 3 to 4 per cent against an earlier estimate of 7 to 8 per cent, thanks to slump in demand.
Total demand for the metal in India was around 600,000 tonnes in 2001-02 and the country witnessed a total metal production figure 637,000 tonnes. In 2002-03, aluminium production was expected to move up to 720,000 tonnes mainly due to recent smelter capacity augmentation at Nalco and Hindalco.
Global recession has also affected the domestic aluminium industry. Domestic prices have been ruling flat for the last six months. Industry sources said that primary producers were facing some difficulty in selling the metal because aluminium consumption has not been rising in the country as much as expected.
Global aluminium prices have been witnessing a downward trend for the past couple of months primarily owing to global recession. Demand for aluminium in USA, Europe, Japan and other major consuming countries of the world has slowed considerably since second half of 2001.
This has resulted in a steadily rising aluminium inventory which touched nearly 1.3 million tonnes recently. However there was no significant production cut back in recent times for correcting the market imbalance.
Although there was still no clear indication about when metal prices would stabilise in the international market, industry sources said it would largely depend on the overall global economic recovery.
Producers were reportedly pinning their hopes on recovery of the US economy from mid 2003 but recent corporate frauds, rise in energy prices and war fears may dampen demand. Recovery of other major economies were expected to follow suit.
As a result London Metal Exchange (LME) metal prices may start firming up from the third quarter of, 2003. This will translate into a two months lag for prices to firm up in India because in the domestic market, primary aluminium producers do not generally revise their prices in tandem with international prices.
