India’s aluminium industry is on the rebound after a period of lower demand, according to domestic aluminium firms. Double-digit growth is on the horizon, they say, thanks to significant increases in automotive sales and industrial activity.
Domestic aluminium producers also point to an increased public investment in infrastructure, reforms in the country’s power sector, and strong rural demand as driving domestic aluminium needs.
“Indian demand is expected to witness a strong double-digit growth following the steps taken up by the government to boost industrial production, its investment in infrastructure and its thrust on power sector reforms. Good monsoons are expected to boost rural demand,” explained a Hindalco representative to analysts on a recent conference call.
National Aluminium Company Ltd.’s (Nalco)’s chairman and managing director Tapan Kumar Chand echoed these sentiments in recent comments as well, chalking up demand growth to a significant bump in automotive sales.
“The Chinese demand has witnessed a strong recovery, which is surprising on the positive side. Buoyancy in the property market, infrastructure investment following stimulus and tax rebates and automobile industry have helped the demand pickup,” the Hindalco representative went on.
Global demand is on the rise after excess capacity from China drowned the market in cheap metal. China’s glut translated into a drop in prices, driving many producers out of business. However, prices have begun to rebound slightly thanks to a decline in production of four million metric tons last year, largely comprised of high-cost capacity.
Though prices on the LME have suffered, the three-month futures price is now steadily hovering in the US$1,700 per metric tone area, and producers expect it to continue to make gains going forward.