India on an unstoppable forward march

In tune with the changing dynamics of Indian economy, the manufacturing PMI in April and core sectors in March rose, considered to be the bellwether of a country’s economic strength. A robust growth in the output of coal and steel revived the growth in core sectors. 

Going forward, however it will be a challenging task for India to build steel capacity of 300 million tonne (mt) by 2030 against the current 125 mt. To supplement this growth, the Cabinet approved National Steel Policy 2017 that envisages Rs 10 lakh cr investment to create more capacity in steel sector and increasing supply of domestic coking coal.

Government’s thrust on infrastructure-led growth, will not only support steel demand, but also help achieve world class cost efficiency and enhance value addition to compete with global markets instead of adopting protectionary measures which are not sustainable in the longer term. 

With this robust economic growth, the consumption of aluminium too will play a pivotal role and is  set for a roller-coaster ride as new application areas are explored for the metal.

Major aluminium producer Vedanta Aluminium is upbeat about growth prospectus for this metal and is all set to multiply its present aluminium capacity of 4.1 mt to several folds in the coming years. This is all due to the abundant availability of bauxite and coal in India. 

Positive developments have come out for country’s other aluminium giants like Hindalco who won two coal blocks each in Chhattisgarh and Jharkhand via auctions, and Nalco being allocated two coal blocks in Odisha with reserves of around 200 mt that could further spur the production of aluminium in the country.

In addition to the raw material advantages, experts have estimated that the world’s fastest aluminium demand growth will happen in India which creates suitable conditions for expansion in future aluminium smelting capacity. 

As per an industry report, between now and 2021, India’s aluminium demand will grow at an annual rate of 7.3 per cent to 4.4 mt from 3.3 mt. Globally too aluminium consumption will rise 3.1 per cent annually to 48 mt from the current 42 mt. 

Going ahead, the shift will be seen towards light weighting and industry’s much preferable choice would be towards aluminium. Aluminium replacing steel in particular in a growing number of applications makes the industry bet high on this metal.

However what is likely to come in the way of the industry’s growth further is the challenges from increasing  imports and competition from China, Vietnam and South Korea because of which the primary and secondary aluminium producing are incurring losses.

The government is therefore making all possible efforts, including considering imposition of Minimum Import Price on certain categories of aluminium products to protect the domestic industry. 

Going further Indian aluminium demand is expected to get a boost following focus on smart cities and improving prospects of business and construction industry.

Rapid urbanization, as the country continues to develop towards a more consumer-focused economy, should augment consumer-driven demand and will help in sustaining strong growth in aluminium demand into the next decade.