Aluminum - India Aluminum Makers Win More Exports to Japan

Indian aluminum producers like Vedanta Ltd and Hindalco Industries are expanding sales to Japan as U.S. sanctions against Russia’s aluminum giant Rusal and tariffs on its aluminum imports reshuffle traditional supply routes.

The India-made aluminum products are usually not regarded as having guaranteed high quality by demanding Japanese buyers, who have always preferred top-class producers like Rio Tinto, Alcoa as well as United Company Rusal.

However, imports of aluminum ingot from India doubled in the first eight months of 2018 compared with the same period last year, according to Japanese trade data, while imports of aluminum alloy of high value surged 11-fold off a tiny base.

See Also: India’s Exports May Benefit from U.S.-China Trade War

“Because of the sanctions, consumers would like to ensure some security of supply, so they’d like to prefer multiple suppliers instead of one supplier,” said Samir Cairae, Vedanta’s chief executive in charge of diversified metals business in India.

India’s win of more sales is a strike against Rusal, the world’s second largest aluminum maker, which accounted for about 20 percent of Japan’s aluminum imports in terms of both ingot and alloy in 2017, but which has seen falling share due to U.S. sanctions.

Customers globally have had to scramble to find alternative sources of metal even after the United States eased sanctions restrictions for some customers, and they were likely to permanently diversify supply chains, Reuters said, citing a source at a Japanese trading house.

Read More: China’s Aluminum Exports Soar as Rusal Sanctions from the U.S.

Japanese trading houses such as Mitsubishi Corp have been making aggressive purchase of supplies from India as well as other countries to help customers diversify supply and avert risks, traders said.

Japan bought 59,545 tonnes of aluminum ingot from India in the eight months to March, double the volume a year earlier, while imports from Russia dropped 21 percent to 175,694 tonnes, according to Japanese trade data.

Its aluminum alloy imports from India soared to 3,008 tonnes over the same period, while Russian imports sloped down 10 percent to 185,685 tonnes.

The U.S. move of imposing 10 percent import tariffs on aluminum starting in March and sanctions against Rusal in April has largely shook up the market, driving aluminum prices up to seven-year highs and pushing up costs to obtain physical metal in the U.S. domestic market.

As India’s largest aluminum producer, Vedanta, who sees a big opportunity in Asian market including Japan, is spending more efforts in boosting exports of its value-added products such as billets, which can be used in the transport, construction and packaging industries, among others.

 

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