India's imports of semi-finished aluminium rise nearly 40% m-o-m in May'24

• ADC12 ingot imports surge 80% m-o-m
  
  
• Uptick in scrap prices results in higher semis imports
  
  

In May 2024, India's imports of semi finished aluminium products rose by 38% m-o-m. Additionally, imports increased by 70% compared to the same month of last year, according to provisional data with BigMint.

In May, imports of ingots were 38,700 tonnes (t), accounting for 84% of total semi-finished imports. Billets contributed 3,900 t, making up 9% of the total, while slabs at 2,500 t represented 2% of total imports.

In a significant development, Indian automobile die casters have increased imports of ADC12 ingots, which recorded a rise of ~80% m-o-m in May reaching 6,500 t compared to the previous month's 3,700 t. Meanwhile, other grades such as A356, LM6, LM24 and LM25 accounted for the remaining 32,200 t.

In India, total consumption of ADC12 amounts to around 50,000-60,000 t. In May, the country imported 6,510 t of ADC12, and starting from March higher imports point to a sudden increase in demand.

Notably, A356 was the most traded grade out of all alloyed ingot grades accounting for about 50% of total alloyed ingot imports. In May, the import volume of A356 significantly increased by 33% m-o-m to 15,453 t.

During the same period, India's imports of billets, primarily grade 6082, surged dramatically from 635 t in April to 2,151 t in May.

Notably, the southern region imported the majority of ADC12 in May, amounting to 5,410 t, followed by the western region at 947 t and the northern region at 153 t.

Factor driving ADC12 imports

In January, imports of scrap declined due to the ongoing crisis in the Red Sea but saw a significant rebound in April and May largely driven by delayed shipments booked earlier in the year. The delay in these shipments caused shortages in scrap stocks within the country, leading to higher prices of both domestic and imported scrap. This global and domestic surge in scrap prices prompted alloy manufacturers to increasingly favour alloy ingots imported from abroad, avoiding the higher costs associated with producing ingots from scrap.

Furthermore, alloy manufacturers showed increased interest in exploring overseas markets to achieve better price realization.

Cost-competitive imports from Malaysia

Malaysia exported a significant amount of ADC12 to Chennai in May, with increased inflows from Southeast Asian countries compared to April. Reports indicate over 3,366 t of ADC12 alone imported to Chennai during the month.

In May, LME aluminium prices increased by 2.7 % m-o-m to $2,497/t, up from the previous month's average of $2,565/t. This increase contributed to higher prices for imported aluminium scrap by up to 11% m-o-m. Concurrently, aluminium stocks increased by 75% m-o-m, from 515,908 t in April to 9,05513 t in May.

This trend has encouraged alloy manufacturers and some Original Equipment Manufacturers (OEMs) to increase imports of alloy ingots, particularly from Malaysia. They leverage Free Trade Agreements (FTAs). In Chennai, many ADC12 manufacturers have opted to import directly as a result.

According to sources, the imported price of ADC12 from Malaysia to Chennai stood approximately at INR 2,12,000/t ($2,540/t). According to BigMint data, the ADC12 price ex-Chennai is around INR 216,000/t, which is approximately INR 4,000/t higher than the imported price. This price differential is a significant factor motivating buyers to import material.

Grade-wise, country-wise imports

In May, imports of semi-finished A356 grade increased by 34% to 15,373 t from 11,455 t in April. ADC12 grade rose by 76% to 6,510 t from 3,692 t, while LM6 grade surged 420% to 130 t from 25 t. However, LM24 grade decreased by 33% to 150 t from 224 t in April. Other grades saw a 6% decrease to 3,805 t from 4,037 t in April.

In May, country-wise imports showed a slight improvement, with Malaysia being the largest supplier followed by Qatar, Bahrain, Oman, UAE, , Russia, and others contributing 14,654 t, 8,465 t, 6,909 t, 6,101 t, and 3,626 t, 1,626 t, and 4,537 t respectively. Imports from other countries stood at 1,966 t.

Outlook

It is anticipated that imports of semi-finished aluminium products might witness a drop in the coming months as imports of scrap are expected to ease and will be utilised domestically for the manufacturing of semi-finished products particularly alloy ingots.