Summary
Consolidating and rebounding, average prices to improve
The global aluminium industry hit a rough patch, with the global financial crisis, which began
in the last quarter of 2008, severely impacting the demand for the industry. The growth in
industrial production of most of the major economies, slipped into the negative territory after
several years of strong positive growth. The slowing economy severely affected the demand in
the markets. The earlier years of strong growth inspired many manufacturers to increase their
capacities, thus affecting the supply end as well. The double impact of a slowdown in demand
and the expansion of capacities caused an unprecedented increase in inventory levels across
the industry. This rise in the inventory levels induced the prices to tumble.
Since April'09, the prices of base metals have shown a substantial improvement after the
approval of stimulus plans by various governments across the globe leading to the increase in
stock piling by China. Restocking by China and the improvement in the global economic
indicators has kept metal prices buoyed through the rest of CY09. While the historical peak
prices are not likely to be achieved soon, the improvement in the global demand and the
global cost curve provides some support to the prices.
As against the global situation, the domestic aluminium industry continued to record robust
growth with an increased demand from the automobile and constructions industries. With the
advantage of being one of the least cost producers of aluminium, all the domestic companies
are implementing major expansions thereby doubling the domestic capacities and pushing
India to become one of the major exporters of aluminium across the world.
In FY10, almost all the manufacturers reported a severe drop in their top-line and their
profitability owing to the fall in realisations. Going forward it is expected that, industry
margins are likely to improve on account of an increase in realisations as a result of an
improvement in the global and domestic demand.
Our report on the 'Aluminium Industry' provides our forecast on
the domestic aluminium industry, which covers the outlook on the domestic profitability of
players, cost of production, domestic demand-supply balance and India's export
competitiveness. Our forecasts are based on its bottom-up demand forecasting
model based on an in-depth knowledge of the metal industry and interaction with key industry
players.

Table of Contents
EXECUTIVE SUMMARY
Consolidating and rebounding, average prices to improve
Global aluminium price forecast
Altering global supply to match demand
New capacities, adding to the challenge
India Shinning, encouraging domestic demand
Well positioned to export the surplus
Domestic player profitability to improve in FY11 and FY12
SECTION I: INDUSTRY OUTLOOK
OUTLOOK ON DOMESTIC PLAYER PROFITABILITY
Fall in realisations impacted the margins during FY10
Changes in raw material prices
Profitability to improve during FY11 & FY12
Cost of production and Realisations forecast
OUTLOOK ON GLOBAL DEMAND-SUPPLY BALANCE
Global Demand
Drawing a come-back
Chinese demand key to recoup lost ground
China slowing but still growing
Chinese Construction Industry
Chinese power consumption
Positive Growth from the Advanced Economies
Global Supply
Global supply to increase at a steady rate
Global operating rates to improve albeit marginally
Global aluminium market to remain in a surplus state
OUTLOOK ON DOMESTIC DEMAND-SUPPLY BALANCE
Domestic Demand
India Rural-urban mix, decreasing household size
Increasing disposable income
Building and constructions sectors
Automobiles Sector
Power Transmission
Packaging and white Goods sector
Domestic Supply
Domestic Aluminium smelter capacities
Domestic Alumina refinery capacities
Domestic Aluminium company-wise production
SECTION II: PAST AND PRESENT OF THE INDUSTRY
Introduction
Global Demand-Supply Scenario
Global Demand
Global Supply
Domestic Demand-Supply Scenario
Domestic Demand
Domestic Supply
Raw materials Scenario
Alumina
Bauxite
Caustic-Soda
SECTION III: INDUSTRY SECTION
History of the Metal
Classification of the Industry
Characteristics of the Industry
Geographical Locations
Global Bauxite Reserves
Global Smelter capacities
Consolidation-The famous Six
Government Regulations-Customs Duty, Excise Duty
End-use Consumption Pattern
Technical Know-how
Production Process
Company Section
Hindalco Industries Limited
National Aluminium Company Limited (NALCO)
Sterlite Industries India Limited (SIIL)
Global Player Profiles

LIST OF CHARTS
Global Aluminium Price Forecast
Global primary aluminium demand-supply balance
India cost advantage: Average cost of production
Domestic Supply far exceeding demand
India Exportable surplus
Domestic player profitability
Domestic aluminium industry profitability
Increase in Cost of Production
Y-o-Y percentage increase in key raw material cost
Domestic player profitability
Cost of production and Realisations forecast
Country-wise share in aluminium consumption
China-Value-added of construction Industry
China-Investment in Fixed Assets
China-Domestic Electricity Production
China-Domestic Electricity Production Capacity
China Cars and Commercial Vehicles Production
China, GDP at Constant Price
Advanced Economies GDP at Constant prices
Global production levels
Upcoming capacities and global operating rates
Global demand-supply scenario
Domestic demand break-up
India: Rural-Urban mix
Decreasing Household size
Per Capita Income (At constant prices)
Domestic Consumer durables production
Domestic Supply far exceeding demand
Surplus production to be exported
Inverse correlation between LME prices and inventory
Global Production and Consumption
Global primary aluminium demand-supply scenario
Global demand-supply, Surplus-Deficit
Change in US consumption pattern
Global primary aluminium consumption Share
2008-China consumption pattern
2008-World consumption pattern
China: Floor space of buildings
China: Electricity consumption
USA: Cars and Commercial Vehicles (CV) production
Global capacity trend
CY 2008: Announced capacity curtailments
Global primary aluminium capacity utilization
Domestic demand-supply situation
India: End-use consumption pattern
Aluminium Wire-rods production
North-America light vehicle aluminium content
Index of Industrial Production
Growth in Real GDP at Factor cost
India: Per capita income at constant prices
Alumina cost components
Average yearly spot bauxite prices
Global bauxite reserves and production
Caustic soda Domestic demand-supply
Caustic soda: Domestic and International prices
Global Alumina Demand-Supply
Global alumina demand-supply scenario
Global alumina Price Trend
Domestic alumina demand-supply scenario
Major countries with Bauxite Reserves
Global, company-wise primary metal production capacities (2007)

List of Tables
Domestic Demand drivers
Global Smelter Capacities share
India: Aluminium Share in 2-wheeler segment
Power Transmission lines
Domestic Aluminium smelter capacities
Domestic Alumina Capacities
Aluminium: Company wise production
Capital Expenditure cost
Country-wise Global Bauxite Reserves
World Smelter Capacities CY2008
Major Takeovers in Aluminium Industry
Changes in Customs Duty
Changes in Excise Duty