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Mumbai , Sept. 26

A MAJOR problem confronting the domestic primary aluminium producers is that while production is rising annually, the consumption of the metal is not showing commensurate growth.

Aluminium production is estimated to have gone up to 6,78,000 tonnes during 2002-03 but estimated consumption during the same year has lagged behind at 6,18,000 tonnes, leaving a market surplus of 60,000 tonnes.

The situation is likely to worsen in the coming years.

While the country expects to raise production to the one million tonne level by 2006, only 780,000 tonnes are likely to be utilised domestically.

Aluminium production is expected to grow at about 8 per cent annually and domestic companies are in the process of expanding their capacities to cater to the increased demand; annual demand growth is expected to be around 6-7 per cent, analysts said.

Aluminium production increased by 17.5 per cent to 78,581 tonnes in the quarter ended June from 66,867 tonnes in the corresponding previous quarter, mainly on account of additional production from new potlines. Production of alumina also grew by impressive 24.2 per cent to 1,18,175 tonnes in the quarter ended June over 95,000 tonnes.

One cannot expect to nurse such huge stocks given the cost of money, which, despite the cut in interest rates, is considered to be still higher by world standards.

It is, therefore, necessary to aim at volume growth by diversifying the consumption of aluminium in new areas while retaining the present growth sectors, they added.

Indian consumption of aluminium in the electrical and electronics sector is presently 32 per cent as against the world average of 9 per cent.

So, there is not much scope for an increased market share in this sector.

In the construction sector, it is 16 per cent against the world figure of 18 per cent.

In packaging, almost 12 per cent is being used against 17 per cent for the world, while in consumer durables India has reached the world figure of 6 per cent.

Industrial machinery is taking around 4 per cent of national production while the world average is 9 per cent. In powders and chemicals also, aluminium intake is 6 per cent of production.

In the transportation sector, the country is using hardly 18 per cent of aluminium against the world figure of 31 per cent, they said.

Fortunately, aluminium companies like Hindalco and Nalco have emerged as the lowest cost producers of the primary metal.

Continuous research into development of aluminium products at affordable costs for use in sectors with growth potential will help the industry in its efforts of diversifying aluminium applications.

It is thus apparent that transportation provides the largest scope for raising aluminium consumption, followed by packaging, industrial machinery and construction.

The challenge before the aluminium industry is, therefore, one of convincing the users in these four sectors not only to persist with their intake of the metal but also to widen the applications.

Needless to say, the efforts of the industry to promote applications of aluminium in existing and newer areas cannot succeed unless support and encouragement is available from the Government, too.

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