Responds to Prime Minister Modi's stimulating call to Hindalco to expand aluminum processing capacity

Hindalco Industries Ltd., India’s largest aluminum producer, plans to invest Rs 500 crore (US$773 million) in the next five years to increase the production capacity of aluminum-manufactured products such as panels, and to appeal to countries to accelerate investment in infrastructure construction.

The company is collecting information on the sale of poorly operating rolling mills or aluminum extrusion plants in India to help it meet its production target of increasing production by 66% to 800,000 tons. Satish Pai, managing director of the flagship agency of Aditya Birla Group, the billionaire Kumar Mangalam Birla, said in an interview on Tuesday.

Pai pointed out that Indian Prime Minister Narendra Modi promised to increase investment to boost the economic strength of Asia's third-largest economy, improve housing and transportation, which will lead to a record increase in metal production in the country. However, due to the overcapacity of primary aluminum products in India, the Indian aluminum market will be more open to the development of aluminum downstream and the automotive industry.

House panel

"If we want to seize the opportunity brought by Prime Minister Modi's stimulus plan, we must have downstream products," said Pai in Mumbai, which means "We want to produce more cables, wires, house panels and aluminum foil."

Earlier this week, Hindalco announced that its profit for the quarter ended March 31 was the fifth consecutive quarter, mainly due to the rebound in LME aluminum prices, and the company’s output hit a record high.

Pai pointed out that India produced 4 million tons domestically and consumed about 3 million tons of aluminum. Hindalco recorded a record production of 1.3 million tons of primary aluminum, an increase of 481,000 tons compared with last year. In the next five years, domestic demand is expected to increase by 9% to 10% to 6 million tons.

With the expansion of Hindalco in India, its world’s largest aluminum rolling mill, Novelis in Atlanta, also plans to make further progress in the automotive sector, said Pai, who had just taken over the company’s top position last August.

When asked about the acquisition plan of Novelis, Pai pointed out that "Novelis is an important part of the company's expansion process, we will further expand investment in the automotive industry," but he did not provide specific operating details. He also pointed out that "we are optimizing the balance sheet, the company operates well, and will fully seize this opportunity for development."

Pai pointed out that with strong demand support, aluminum prices are expected to continue to operate in the $1700-$2,000/ton range from now until next year. If China commits to cutting capacity, aluminum prices may even rise to $2,200 per ton.