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ICRA Predicts Accelerated Growth in Domestic Aluminum Demand Driven by Infrastructure Thrust

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India’s domestic aluminum sector is poised for a robust 9% growth in the upcoming two fiscal years, propelled by the Government’s commitment to infrastructure development. This growth trajectory is set to outpace the global aluminum demand rate, according to ICRA.

Driving Factors Behind the Domestic Demand Surge

A significant portion of the domestic aluminum consumption is concentrate within the power transmission and distribution sectors. The Central Electricity Authority’s plan to expand capacity by 16,600 circuit kilometers in the ongoing financial year. Marking a 13% increase from FY2023, underscores the momentum in this sector.

Renewable Energy Transition Boosts Prospects

The Government’s ambitious target of achieving 500 GW of renewable energy capacity by 2032 is expect to catalyze substantial capacity additions for transmission lines in the coming years.

This favorable outlook bodes well for the foreseeable future of domestic aluminum demand.

Infrastructure Development and Transition to Sustainable Energy

The extensive infrastructure development initiatives, rising urbanization rates, Housing for All projects, railway investments in metro networks. And aluminum-based Vande Bharat trains collectively contribute to driving domestic aluminum demand. Furthermore, the Government’s supportive policies accelerate the shift towards cleaner energy sources, further boosting demand.

Aluminum’s Role in Vehicular Efficiency and Electric Mobility

ICRA predicts that the emphasis on reducing vehicle weight to enhance fuel efficiency will lead to higher aluminum usage per unit. The anticipated surge in electric vehicle adoption within the next decade is also expect to play a significant role in elevating domestic aluminum demand.

Global Perspective and Aluminum Outlook

While global aluminum consumption is project to grow modestly by 1% this year. China’s improved metal supply may lead to a surplus metal balance in 2023.

Challenges within China’s building and construction sectors continue to impede consumption, potentially exerting pressure on aluminum prices.

In summary, India’s proactive infrastructure policies and the shift towards clean energy sources position domestic aluminum demand on a growth trajectory that sets it apart from the global scenario.

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