Aluminium demand to grow by 6% in 2012-14: IMaCS

　　with the expectation of moderation in growth in India’s industrial production and real gross domestic product (GDP), demand for aluminium is likely to increase at an annual average growth rate of 6% during 2012-2014, says ICRA Management Consulting Services Ltd (IMaCS), a subsidiary of ICRA.

　　IMaCS，

　　IMaCS, in its commentary on Indian aluminium industry, says over the medium term the sectors that are likely to drive the expected increase in demand include power, construction and automotives. India’s aluminium consumption increased 7% in 2011 to around 1.6 mt, and at a 5-year CAGR of 8%.

　　The bulk of India’s demand is accounted for by the electrical sector (39%), followed by transport (18%), machinery (15%), and packaging (9%). By comparison, globally, the use of aluminium by major sectors stands at transport equipment (29%), building/construction (18%), packaging (18%), electrical (9%), and machinery (8%).

　　India’s primary aluminium production capacity is expected to increase from 1.7 million tonnes per annum (mtpa) at present to 4.7 mtpa by end-FY2017, with much of the forecast expansion in capacity and production targeted for export markets. Aluminium production capacity is forecast to increase by 8.7 mtpa to 13.3 mtpa, with around 4 mtpa of capacity surplus to domestic requirements, the IMaCS report said.

　　IMaCS report says that although India’s annual per capita aluminium consumption has increased from 0.6 kg in 1996 to 1.3 kg in 2011, it is around 10% of China’s per capita consumption of 13 kg. India’s per capita consumption is unlikely to increase at the same rate as China because of lower share of industrial sector in India’s GDP, and lower proportion of manufactured products in India’s merchandise exports.

　　World primary aluminium consumption aggregated 42.4 million tonnes (mt) in 2011, making aluminium the world’s second most used metal, after iron. Over 2007 to 2011, world aluminium consumption grew by an estimated compounded average growth rate (CAGR) of 4.6%, the IMaCS report noted.

　　Aluminium’s main markets are China, which represented 41.4% of worldwide demand in 2011, followed by US (9.6%), Germany (5%), Japan (4.6%), and India (3.7%).

　　IMaCS report on the price trends says that during 2011, although world aluminium prices increased 10.5% to average US$2,401/tonne (t), prices declined from June 2011 reflecting weaker consumption growth in most major consuming economies. During January-September 2012, prices declined 19% to US$2,030/t. Prices rallied in early-2012 because of recovering market confidence and better-than-expected global growth. However, with renewed setbacks to global recovery, prices fell below US$2,000/t during June-August 2012. Prices rebounded somewhat in September 2012 in anticipation of a pickup in economic activity beginning in the fourth quarter of 2012 and the impact of possible stimulus measures in China. Prices continue to be depressed by the market surplus and have remained susceptible to fluctuations in the global economic cycle.

　　In 2012, world aluminium prices are forecast to decline 15% to average around US$2,050/t. World consumption is forecast to grow at a lower rate than production, and stocks relative to consumption could rise from an estimated 8.6 weeks at end of 2011 to 11.7 weeks at the end of 2012. On the upside, prices could be supported by higher energy and raw material costs. Domestic prices would continue to remain linked with world prices, and price changes could be determined by exchange rate fluctuations, the IMaCS report said.