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Demand-supply
dynamics
Demand
The consumption pattern
of aluminum in India is different from the global consumption
pattern. The demand for the aluminum industry has been
predominantly from the electrical sector. This sector is the
largest end user of aluminum in India accounting for 36 % of the
total aluminum demand. The transport sector contributes to another
22 % of the total demand while the consumer durable and packaging
sectors consume 12 % each. The construction sector consumes 7% of
the total aluminum demand. Total domestic consumption was about
0.55mn ton in FY98.
Per capita aluminum
consumption in different countries
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Countries
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Consumption
|
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India
|
0.5
|
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Japan
|
30.9
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USA
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26.9
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Germany
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30.1
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Sweden
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25.3
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Switzerland
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32.5
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Italy
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20.9
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UK
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11.1
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France
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17.7
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Australia
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17.9
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Venezuela
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8.2
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Thailand
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0.9
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Malaysia
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2.4
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In the developed world,
21 % of the aluminum is consumed by the construction industry.
Consumption by the electrical segment is just 9 %. Consumption of
aluminum by the transport sector is 25%. The developed world also
consumes a higher amount of aluminum in the form of aluminum foils
used for packaging purposes.
Aluminum Control Order
of 1970 had earlier stipulated, 50 % of all aluminum production to
be of electrical grade. This was responsible for the high amount of
aluminum being consumed by the electrical sector.
The power sector’s
share has been reduced considerably from 65 % in the earlier 1990s
to 36 % till date. One can expect the share of aluminum in the
power sector to remain substantial given the government's policy of
giving a major thrust to the electrification process. India's per
capita power consumption is even lower than Pakistan. With the
implementation of various fast track power projects and the Union
governments decision to give a major fillip to the power sector,
should definitely benefit the aluminum industry.
In the power sector
aluminum is used in conductors, extrusions, foil wraps and even
conductors for overhead transmission. Conductivity of aluminum
being greater than that of copper it is preferred to the latter. In
terms of price aluminum again comes out as the winner.
Another sector, which
consumes aluminum to a great extent. is the automobiles sector.
This sector accounts for 22 % of total consumption of aluminum in
India. Globally the sector holds 25 % of the total consumption.
Aluminum has an advantage over steel due to its higher strength to
weight ratio, which helps reduce fuel cost. The metal also has a
higher thermal efficiency, which leads to better engine
performance.
In the western
countries, aluminum is used in car bodies and engine parts.
Aluminum content in automobiles has increased from 3 % in 1975 to
45 % till date. The increase in the use of aluminum in the
automobile segment could help reduce the overall weight of vehicles
by 20-25 %.
According to Alien
Born, CEO of Alumax the usage of aluminum cars in European markets
is slated to increase. Hence one sees considerable growth potential
in that market. Currently these cars consume 160 lb of aluminum
compared to 250 lb used in the US markets.
In India, the use of
aluminum in passenger car stands on an average at 20 kg in
comparison to 30-35 kg witnessed in other developing countries and
80--100 kg in the US. In India, Maruti Zen has the highest aluminum
content amongst all the vehicles. Many more Indian cars could start
having aluminum engines. Audi the German car completely made from
aluminum.
In the construction
sector, aluminum could replace wood with the government
discouraging the use of the same. In the packaging sector aluminum
foils could replace plastics since they are more convenient apart
from being very effective.
Trends In
Growth Of Domestic Aluminum Consumption (CARG
%)
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Product
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85-95
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95-96
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96-97
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Metal
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6.0
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9.4
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3.9
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Sheet
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6.0
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4.3
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(4.8)
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Foil
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9.0
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12.1
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4.0
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Extrusion
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4.5
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10.4
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9.6
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Aluminum
Consumption By Products
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Segment
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Percent
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Wire Rods
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30
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Rolled
Products
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25
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Extrusions
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19
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Castings &
Alloys
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14
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Foils
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6
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Other
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6
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The packaging sector
accounts for 12 % of the total aluminum consumption. The sector
approximately consumes 50,000 ton of aluminum per annum. Packaging
sector uses aluminum for manufacture of cans, containers
collapsible tube foils and closures. Foils are increasingly being
used for packaging food products, tobacco pouches, pharmaceutical
strips and inner lining of tetra packs.
Packaging is growing at
a faster rate as a result of rising consumerism and growing brand
awareness in India. Aluminum is also a substitute for tinplate
glass paper and jute. The concept of soft drink in cans has not
caught on in the Indian market because of the markets being highly
price sensitive. While in urban area’s aluminum cans do find
some takers, consumption of cans in rural and semi urban areas is
absolutely miniscule. Producers in India are therefore reluctant in
setting up a aluminum beverage can unit
Aluminum to a large
extent is also used in consumer durable. The high thermal
efficiency, conductivity, corrosion resistance and low weight of
aluminum makes it ideal in the consumer durable sector especially
in the manufacture of electric fans air conditioners and coolers
where it is used in the form of extruded flat products.
Aluminum is also
increasingly being used in gas cylinders, cycles, rigid food and
non food containers, mines prop and beer and beverage
cans.
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