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Downstream aluminium industry protests proposed minimum import price

Downstream aluminium industry protests proposed minimum import price
India’s annual consumption of aluminium is 3 MT and production capacity is 4 MT.
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Slamming the proposal to provide protection to primary aluminium producers like Hindalco, Vedanta and state-run National Aluminium Company, the Aluminium Secondary Manufacturers Association (ASMA) has said there is no justification for imposing any duty or minimum import price (MIP) on aluminium.

The downstream industry has said that if MIP is imposed, the cost of imported raw material, unwrought aluminium, will be higher and the industry will have to pass on the increased costs via increasing the sale price.

InfraCircle on 16 November first reported that state-run engineering consultant Mecon Ltd had recommended imposition of MIP on primary aluminium to guard the industry against cheap imports. 

While primary aluminium producers have sought protection from cheap imports, the downstream industry and secondary aluminium manufacturers have strongly opposed the move.

“In case MIP is imposed on unwrought aluminium, secondary manufacturers will have to increase their sale price to the minimum possible extent by taking a hit on their margins, which are already very less, to compete with primary producers who have no impact from the imposition of MIP as they have their own raw material and don’t need to increase the price of downstream products,” said a senior executive of the association on request of anonymity.

“Mecon is interested in fixing the MIP when primary producers are getting a margin of about $550 per metric tonne,” the executive added.

The association recently wrote a letter to the Prime Minister’s Office (PMO) and mines secretary Balvinder Kumar, saying that primary aluminium producers were seeking “undue favour” and “protection from fair competition”, while creating “unfair competition” for the secondary manufacturers many of whom are medium and small scale industrial units.

Mecon has advised the ministry of mines to impose MIP on the import of unwrought aluminium at $2066 per tonne.

“Where is the justification in imposing MIP of $2066 when the landed cost of the imported metal in India is $2040-2050 per tonne? It seems that Mecon wants to give a guarantee to the primary producers that they will always be getting a fix profit of 38-40% at the cost of small and medium industries,” the association further added.

A senior government official, who did not wish to be named, said mines minister Piyush Goyal is going to meet all industry stakeholders on 4 January before finalising its recommendations.

Queries emailed to ministry of mines, PMO and Mecon on 3 January remained unanswered.

Meanwhile, India’s Directorate General of Safeguards on 13 December turned down the plea of primary aluminium manufacturers for imposing safeguard duty on unwrought aluminium.

India’s annual consumption of aluminium is 3 million tonne (MT) and production capacity is 4 MT. Nearly half the consumption is met by imports, mainly from China. On 29 December, aluminium price on LME was at $1,710 per tonne, compared with lows of $1,440 per tonne in November 2015.

 

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