A top Indian aluminium industry executive sees a strong 2018 ahead thanks to less of the metal emanating from the People’s Republic of China, an increased thirst for it in North America and Europe, and a rise in input costs.
Chairman and Managing Director of National Aluminium Company (Nalco) and Aluminium Association of India president Dr. Tapan Kumar Chand told domestic media that the global price of the metal, which reached a three-year high of US$2,246 per metric ton last month, could see an improvement of as much as US$150 per metric ton in the current year.
“In FY18, till the end of November, international aluminium prices had averaged at $2,000 per tonne. We expect, in the next financial year, prices would move up by $150 per tonne supported by capacity curtailments in China and demand pick up in EU and North America markets. Aluminium prices (on LME) have recorded the sharpest increase in this financial year of over $300 per tonne.”
In addition to higher demand and less supply, Chand pointed out that the metal’s continuing recovery from prices as low as US$1,592 per metric ton is also being boosted by falling global inventory.
“There is a short supply of aluminium and this factor is driving prices upwards. Prices will continue to be in the upward trajectory even in the next financial year. There is a heavy cost push factor as cost of alumina and other inputs like petroleum coke and coal tar pitch have jacked up.”
Chand continued by counseling domestic producers to concentrate on boosting value-add offerings, including conductors, extrusions, and offerings for packaging, transport, and aerospace markets.
“Aluminium consumption in the country is projected to rise by 15-20 per cent over the next two to three years. The country’s per capita aluminium usage is around two kg and it can potentially go up five fold. Aluminium producers can focus on diversification of the product base and new aluminium applications.”
While a rise in prices is expected to lift all boats, Nalco’s compatriot firm Vedanta has struggled in keeping costs low. The firm, which is on pace to be India’s most prolific producer of the metal, witnessed production costs rise by 22 percent to US$1,798 per metric ton, largely propelled by rising coal costs and losses in currency conversion rates between the rupee and the United States dollar.