National Aluminium Company (Nalco), India’s leading aluminium producer, is in discussion with the government to have at least a 10 per cent safeguard duty on import of primary aluminium.
The Government of India has recently imposed up to 35 per cent import duty on value-added aluminium.
“We have imposed a safeguard duty of 22 per cent on aluminium foil and 35 per cent on aluminium sheets for 200 days against China,” a senior government official said on March 13. While aluminium sheets are primarily used by sectors such as auto and construction, aluminium foil is widely consumed by the packaging industry. Hindalco and Vedanta are the main producers of the two aluminium variants.
The Directorate General of Safeguards, Customs and Central Excise, which investigates problems pertaining to cheap imports, had in January initiated a probe into cheap arrival of aluminium products into India.
“We are still in discussion with the government,” said C R Pradhan, chairman and managing director Nalco in a telephonic interview to this newspaper. “We are hopeful that the government would consider protecting our interest,” he said.
Aluminium prices have crashed due to credit crunch and the following economic recession which has impacted the demand for the base metal. After recording a high of $3,271 a tonne in July 2008 on the London Metal Exchange (LME), the spot price of aluminium dropped by 67 per cent to $1,251 a tonne in February 2009.
This has led to world wide rising inventory level. The LME inventory level has reached an all time high of 3.45 tonne from the average of 1.2 million tonne. Besides, the inventory of Nalco has reached 20,000 tonne, four time its normal inventory level of 5000 tonne. Company has an annual production of 3,50,000 tonne. It also created concern of dumping of aluminium by China which traditionally maintains a low cost of production.
“Domestic consumption has fallen in China this year, which would lead to dumping of their rising inventory to India and other countries,”said Vipul Shah, an analyst with Mumbai-based brokerage K R Choksey Shares
For China the shipping cost to India is currently $20-25 a tonne for aluminium, which makes the country a favourable dumping ground and a threat for domestic producers.
Source : Business Standard