Exports to China help aluminium producers counter lack of demand

Though on domestic front, primary aluminium is estimated to have plunged 45-50 pet cent on-year in the first quarter following the nationwide and local lockdowns to contain the Covid-19 pandemic, its exports rose 50 per cent on-year in the first quarter and constituted over 75 per cent of total primary aluminium production as against 48 per cent in the same quarter of last fiscal.

Sales in the domestic market and the resultant economic contraction, labour shortage, and logistic disruptions affected key demand segments -- power, construction and automobiles -- which account for over three-fourths of the demand pie.

Yet, the Crisil research showed most smelters were operational during the entire lockdown period.

To be sure, India's primary aluminium production fell just 5 per cent on-year during the quarter, with utilisation levels largely unchanged. Primary aluminium production is a continuous process, and categorised under essential services.

The export market that provided the necessary outlet to Indian aluminium producers were those that have had early success in containing the pandemic, such as China, South Korea and Malaysia.

Exports to China rose a massive 4,500 per cent on-year over a low base. In fact, the sharp rise in exports to China saw its share in India's primary aluminium export basket expand to 10 per cent in the first quarter of fiscal 2021 from a mere 0.5 per cent in the same period last fiscal.