Indian aluminum producers look to safeguard against Chinese imports

Faced with increase in cheaper imports of ingots some of India’s aluminum producers now demand a safeguard duty, but cheaper aluminum auto component imports continue to worry Indian domestic producers.

The ugly specter of cheap imports has raised its head in India’s aluminum sector once again, almost five years since a similar contention was raised in 2009.

India’s three leading aluminum producers – Hindalco Industries Ltd. (HALC.NS), Sesa Sterlite Ltd (SESA.NS) and Bharat Aluminium Company have petitioned the Indian government to impose “safeguard duty” on imports of a bricklike aluminum product for four years to protect domestic producers. The three companies together account for 71 percent of total domestic production. In 2009, some aluminum producers had proposed a similar tax, especially against cheaper imports from China.

“Safeguard duty” is a WTO-compatible short-term measure to be implemented over a limited timeframe to stop any damage done to a country’s domestic steel industry due to foreign dumping.

According to a report in the Business Standard, the Directorate General of Safeguards (DGS), India, has initiated an investigation into imports of “Not Alloyed Ingots Of Unwrought Aluminum,” and found, prima facie, an increase in imports of this product threatening the output of domestic producers. Imports had gone up 154,449 MT in 2012-13 and further to 208,496 MT in 2013-14.

Production of domestic aluminum has slightly declined in 2013-14 (annualized) to 551,086 MT as against the base year 2010-11 when it was 552,864 MT.

The “not alloyed ingot” is a basic form of cast aluminum, made by solidifying the liquid hot metal by pouring it into a mold. The aim is to make the metal easy for handling and transportation. The product is imported from a number of countries, and primarily from Oman, South Africa and United Arab Emirates.

In addition to these bricklike ingots, India’s aluminum producers are also seeing an increase in cheaper imports in the automobile component sector, adding to their worries. Asian automobile component makers have increased their share of imports to India while those from Europe have declined.

Analysts have earlier pointed out that in segments like small bearings, Chinese components had already captured a 40 percent market share, while the overall share for aftermarket components not originally sold as part of a car is around 20 percent.

According to a ratings agency Crisil report, the imports were mainly coming from China, South Korea, Thailand and Taiwan. The reason the imports from China were of such a larger scale was lower capital expenditure costs and better availability of raw materials, the report said.

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