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India's Emergence As Top Scrap Importer Threatens Aluminium Industry

Metal News - Published on Thu, 20 Jun 2019

Image Source: Millennium Post
Millennium Post reported that a recent S&P Platts report reveals that India has taken over China as world's top aluminium scrap importer in the first quarter of the current calendar year. Import of scrap rises by 18.8% YoY to 334,725 million tonnes. In the same period, China's scrap import fell 32.1% on the back of a restriction imposed by the Chinese Government on environmental concerns. This captures a global trend where a pick-up in the demand of aluminium has encouraged leading economies to protect themselves from import of excess aluminium products with strong policy measures with the intent to boost their respective indigenous industries.

Yet India continues to remain an exception. The economy that enjoys abundant reserves of bauxite and coal the two key raw materials for aluminium production continues to depend majorly on aluminium imports. A lax regulation enables nations to divert their excess supplies to India, fueling a glut of cheap, scrap aluminium products in the markets that undermine the potential of the domestic industry.

In FY19, aluminium has witnessed the highest ever import of 23 lakh tonnes, which is 58% of India's demand, resulting in a forex outgo of INR 38,000 crore ie 1.1% of total country's import bill.

In this situation, the Aluminium Association of India has reached out to the government to provide relief in the form of increasing the basic custom duty in the upcoming Union Budget on primary aluminium from 7.5% to 10% reducing basic custom duty and correction of inverted duty structure on critical raw materials.

It has also asked the government to increase the basic custom duty on aluminium scrap from 2.5 per cent to 10 per cent to make it at par with primary metal as in the of all other non-ferrous metals like copper, zinc, lead, tin etc., and dissuade the end-users to rely on cheap scrap from USA and other developed economies.

Mr Rahul Sharma, Vice President, Aluminium Association of India said that "Aluminium is a metal of strategic importance for the country and plays a vital role in national security and nation building. India's demand for aluminium is expected to reach 7.2 million tonnes in next five years, and as such the industry has invested over INR 1.2 lakh crores to enhance capacity to 4 million tonnes per annum to cater to increasing demand. The sector is also one of the largest job creators with more than 8 lakh direct and indirect employment and caters to over 4000 SMEs. This data justifies a robust policy support to create a level-playing field for the domestic aluminium industry.”

He added that "In the current circumstances, Indian aluminium industry requires the government to extend policy measures in line with those extended to steel. Current volatility of aluminium LME prices that saw a steep decline of USD 550 per tonne in last one year, and the restrictive measures taken by China, USA and other key markets to protect their indigenous markets from imports are making India more vulnerable as a dumping ground for primary metal, scrap and secondary products, thereby adversely affecting the competitiveness of the domestic industry. Hence, immediate measures like increased import duty on primary aluminium, scrap and downstream aluminium products are required along with rationalization of input costs of critical raw material of aluminium value chain to help domestic industry retain competitiveness."

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Posted By : Ratan Singh on Thu, 20 Jun 2019
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