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Auto slowdown could hit demand for recycled aluminium products

While usage of primary aluminum grew at a compounded annual rate of 3.5-4% that of recycled aluminum grew at a strong 17-18%, the report said

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Slowdown, Automobiles sector, Recycled aluminium products, Aluminium castings, Aluminium consumption, CRISIL, Two wheeler, Passenger vehicles, Prasad Koparkar, Scrap imports

The slowdown in the automobiles sector is likely to retract demand for recycled aluminium products like aluminium castings in the near term. The share of recycled aluminium in the aggregate share of aluminium consumption in India has shot up in the last three years to fiscal 2019 to 34% from 26% earlier driven by better cost dynamics, according to a report by CRISIL.

While usage of primary aluminium grew at a compounded annual rate of 3.5-4% that of recycled aluminium grew at a strong 17-18%, the report said. However, going ahead, in the near term, CRISIL said it expects a "bump in the growth trajectory due to the slowdown in sale of two wheeler and passenger vehicles." The growth momentum though is likely to pick up in the medium term.

Prasad Koparkar, senior director, CRISIL Research, said: "The demand for recycled aluminium outpaced that of primary aluminium by 2.3- 2.4 times in the last five years led by better cost dynamics and demand from the price sensitive aluminium castings in the automobile sector.

This has in turn led to a surge in scrap imports, he added. The volume of scrap imports nearly doubled to 1.35 million tonne in fiscal 2019 over 0.7 million tonne in fiscal 2014, mainly because of the limited availability of good quality aluminium scrap in the country.

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