The steady flow of reforms and other initiatives from the government have begun to show results – the combined output of eight crucial infrastructure sectors jumped to a 16-month high of 6.4 per cent in March 2016 compared to a fall of 0.7 per cent in the same month last year, signifying that the economy is not only in a position to weather global headwinds but also emerging as the beacon of hope for global investors.
With the government pursuing aggressive growth plans in all spheres of the economy, the application of aluminium among other metals, will get a tremendous boost due to its properties of high strength, durability and corrosion resistance.
Rising imports are a major concern for the industry. Moreover, slowdown in consumption in China has resulted in dumping of surplus production from that country in India and international markets marking a steep fall in prices. However, the domestic demand growth is set to moderately improve in 2HFY16 as the key sectors driving aluminium growth such as automobiles, buildings, infrastructure, power sectors, aerospace and packaging etc are likely to witness a moderate improvement.
Globally, the overcapacity situation prevalent in the industry has been addressed to some extent, since it has proportionately moderated over a period. Long-term consumption trends are quite positive, reflecting rising per capita consumption in emerging economies. Global demand for lightweight industrial metal aluminium will remain strong and supply outside China will continue to tighten during 2016, creating conditions for firmer prices from near seven-year lows.
However, longer-term price evolution for aluminium will largely be determined by supply-side considerations such as the availability of key raw material input such as bauxite and access to low-cost energy. Aluminium manufacturers are battling a spate of cheaper aluminium imports from China and West Asia. The Government has to either ban bauxite exports or raise exports duty to 50 per cent. Bauxite is chiefly exported to China which adds value to the raw material and dumps it back in the form of aluminium and other finished products.
Lightweighting, necessitated by the need for energy efficiency and environmental protection, specially in the transportation industry, is now being encouraged globally. In India too, where the automobile industry is in top gear, the awareness is increasingly felt. It is time aluminium associations around the world take initiatives to reduce emissions by promoting aluminium recycling and encouraging use of the metal in automobiles, power, trains and aircrafts.
The research and development activities related to aluminium sector in India have been primarily government-driven and private sectors have traditionally made little investment in R&D. There is need for the government to support aluminium R&D efforts in collaboration with industries, academia & R&D institutes.
With the robust economic growth seen in the country and changing life styles, the consumption of this fascinating and flexible metal is set for a roller coaster ride as we continue to find new and surprising applications.
With the government ushering in a wave of new economic order with judicious reforms, its landmark Make in India mission and smart cities planned across the country, will revive the investment cycle as the government endeavours to complete the task in hand of drawing the roadmap for unbridled progress.