Aluminium

Last Updated: Dec 24, 2014, 01:59 PM

Aluminium compounds form eight per cent of the earth's crust and aluminium is the third most common crustal metal on earth. Aluminium is commonly known as Aluminium. Pure aluminium is a soft lightweight metal. Mixed with small, often minute, quantities of other materials – iron, silicon, zinc, copper, magnesium, tin, titanium, lithium, chromium, tungsten, manganese, nickel, zirconium and boron - it is possible to produce an array of alloys with specific properties for very different purposes. The discovery, successful extraction and the first commercial applications of aluminium took place in the 19^th Century.

Aluminium is very strong, light, ductile, and malleable. It is an excellent conductor of heat and electricity. It can be cast, rolled or extruded into an infinite variety of shapes. It has unique barrier properties as a packaging material, it resists corrosion and it can be recycled with no loss of quality or properties.

Important Uses:

Aluminium is most commonly formed as alloy though with a marginal quantities. The most commonly used alloying agents or metals are copper, magnesium, manganese and silicon in very minor quantities.

Aluminium is extensively used in industries like transportation, packaging, construction, cookware, electrical transmission, electronic appliances etc.

Mineral Source:

Aluminium ore is bauxite, occurs mainly in tropical and sub-tropical areas: Africa, West Indies, South America and Australia. There are also some deposits in Europe.

Bauxite is refined into aluminium oxide trihydrate (alumina) and then electrolytically reduced into metallic aluminium.

Production:

Alumina is extracted using smelting process. Liquid aluminium is produced by the electrolytic reduction of alumina dissolved in an electrolyte (bath) mainly containing Cryolite. Aluminium is formed at about 900°C, but once formed has a melting point of only 660°C.

Recovery: Two to three tons of bauxite is required to produce one tonne of alumina and two tons of alumina is required to produce one tonne of aluminium metal.

Recycled metal requires only 5% of the energy required to make new metal. Blending recycled metal with new metal allows saving large amount of considerable energy, as well as the efficient use of the extra heat available. At the same time, there is no difference between primary metal and recycled metal.

World Scenario

China is the single largest producer of Aluminium contributing for about 44% of total world production as per the estimates released by the US Geological Survey in Feb 2014. Russia is the second largest producer accounting for about 8.4% followed by Canada, U.S. and Australia with about 6.1%, 4.5% and 4.1%, respectively.

Table 1: Trends in World Aluminium mine production (1000 tons)

	2009	2010	2011	2012	2013
China	12900	16200	18100	20300	21500
Russia	3815	3947	3912	3850	3950
Canada	3030	2963	2984	2780	2900
U. S.	1727	1726	1986	2070	1950
Australia	1943	1928	1945	1860	1750
U.A.E	1010	1400	1800	1820	1800
India	1598	1607	1667	1700	1700
Brazil	1536	1536	1440	1440	1330
Norway	1139	1109	1122	1150	1200
Others	8602	8784	9444	8930	9220
World	37300	41200	44400	45900	47300

Source: USGS

China is the largest consumer of Aluminium in the world accounting for over 45% of world consumption as per the latest estimates available for 2013. Asia excluding China accounts for about 20% of world’s consumption followed by Europe excluding Russia with 15% and North America with 11% and others with 9% of total consumption.

Pattern of major consuming industries in the world indicate that transport and construction industries consume about 50% of total aluminium consumption in the world. Packaging industry accounts for about 17% followed by electrical industry with 12%, machinery and equipment with 10% and consumer durables with 6% of world’s consumption.

Domestic Scenario

India occupies the fifth position in terms of bauxite reserves at about 5 billion tons. But in terms of production, India stands in the seventh place. India’s output accounts for only 3.7% of world production. Among states, Odisha and Andhra Pradesh account for more than 90% of reserves in the country. In terms of consumption, India is the fifth largest in the world. Per capita consumption of aluminium in India is much lower at 1.3 kg compared to that of the world average at 12-15 kg.

Table 2: Trends in production of Aluminium in India (1000 tons)

	Aluminium Smelter	Alumina Refinery	Bauxite Mine
2010	1610	3802	10920
2011	1660	7241	10920
2012	1708	4987	11220
2013	1714	9920	13920
2014	1989	10120	15220

Source: Thomson Reuters

In India, there are three major primary aluminium producers. National Aluminium Co. Ltd., Hindalco Industries Ltd and Vedanta Aluminium Ltd (VAL). Total annual installed capacity of aluminium in the country stood at 18.88 lakh tons in 2013. The primary producers are largely involved in sheet and foil production. However, they are also expanding to extrusions business, which is dominated by secondary aluminium manufacturers.

Consumption pattern of aluminum in India is different from that of world. The largest industry is electrical industry accounting for about 48% of total aluminium consumed in the country followed transport sector with 15%, construction with 13%, machinery & equipment with 7% and consumer durables with 7% of total consumption.

Table 3: Trends in domestic demand and supply of Aluminium (1000 tons)

	Production	Consumption	Exports	Imports
2009	1598	1458	278	250
2010	1607	1475	353	320
2011	1667	1569	338	379
2012	1714	1687	415	256
2013P	1989	1900	425	300

P: Projected based on industry sources Source: USGS, Indian Bureau of Mines (IBM)

Recycling of aluminium is encouraged all over the world and India is also adopting similar policies, as recycling is lees capital intensive, less polluting and more energy efficient. However, recycling of aluminium is limited to unorganized sector confining mostly to utensils and casting industry. Nevertheless, according to the IBM estimates, the recycling industry may contribute for over 35-40% of total aluminium consumption in the country.

Major Markets

Spot markets: Mumbai, Delhi

Futures markets:

International: Comex, LME and SHFE.

Domestic: MCX and NMCE.

Scrap Segment

Aluminium scrap is recycled and used to a significant extent in the domestic market. Various forms of scrap available in the domestic market are explained below.

Varieties: Aluminum Bartan, Purja, ingot, section and wire.

Major Markets: Delhi, Mumbai, Bangalore, Chennai and Hyderabad

External Trade

Export and imports of aluminium ores and concentrates including natural bauxite and others are permitted freely as per the Foreign Trade Policy for 2009-2014.

Major export destinations: south Korea, Japan, China and U.S.

Major import sources: China, Iran and U.S.

Factors Influencing Prices:

· Largely governed by the international markets and their price trends

· Growth and performance of major utilizing industries

· Government policies on trade both direct (restrictions) and indirect (taxes).