Hindalco Industries, an Aditya Birla Group company, expects surging imports and rising coal prices to remain the major concern in the coming days even as domestic demand continues to be robust.

Satish Pai, Managing Director, Hindalco Industries, told BusinessLine that imports from China have gone up 53 per cent in the first half of this fiscal.

Chinese offensive

The Chinese industry began to target India after the US levied an import duty of over 200 per cent on a variety of aluminium products from China.

Cheap imports have battered the domestic downstream industry, which finds it very difficult to compete with China, as the latter subsidises metal prices besides offering a VAT rebate on downstream product exports, Pai said.

China’s metal subsidy, he said, comes from its Shanghai Metal Exchange-based pricing, which is trading $300 per tonne lower than the globally followed London Metal Exchange prices.

Further, to increase its exports, China has enhanced the VAT rebate to 16 per cent from November 1. Import of primary aluminium from China in the form of fake semis has gone up 13 times in the first half of this fiscal, said Pai.

The fake semis are exported in the form of coils to claim the VAT rebate on downstream products, he added.

Apart from the surging imports, Hindalco sees availability and cost of coal in India as another major problem area.

Long-term pact

“Though we have tied up a major portion of our requirement through long-term coal linkage supply, Coal India is fulfilling only 75 per cent of the promised quantity despite their record production. The coal major is giving priority supply to thermal power plants,” said Pai.

The supply shortage has ensured that coal prices in the spot market have doubled, as too many companies are chasing too little stock, he added.

Copper business

The focus on value added products in the copper business has helped Hindalco maintain its margins.

The production of value added copper cathode rods has gone up to 70 per cent of overall sales, compared to 43 per cent last year, due to a ramp-up of production at its new facility.

The strong realisation from by-products such as DAP and gold should support the copper business even as copper concentrate prices have come down to 23 cents per pound from 25 cents due to excess production and lower demand, said Pai.

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