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Bombay Chamber, Mumbai: Effective March 12, 2025, the US intends to eliminate the system of exemptions and quotas on steel and aluminium imports worldwide, reinstating a full 25% tariff on steel, and increasing tariffs on aluminium imports to 25% from 10%. India being a major exporter of aluminium, the US tariff hike is more likely to impact export volumes and realisations for Indian aluminium producers than domestic steel manufacturers.
As per industry estimates, India exported around 40% of its domestic aluminium production in the calendar year 2024 (CY24). The country’s direct aluminium exports to the US are around 6-8% and the sector could see a higher impact from the tariff hike.
“While the impact of tariff hike on aluminium manufacturers is anticipated to surpass steel, India stands to gain from being one of the lowest-cost aluminium producers, owing to the availability of high-quality bauxite reserves,” said Hitesh Avachat, associate director, CareEdge Ratings.
India’s lowest-cost (of aluminium production globally) advantage is mainly on account of the availability of quality bauxite reserves. This improves India’s cost competitiveness in the global market. Industry experts feel this can provide greater cushion to domestic aluminium producers to meet the increased competition from any over-supply scenario arising from the imposition of tariff by the US.
Aluminium production through the primary route remains lower in the US than in the secondary route (scrap route). Thus, the US aluminium industry remains significantly dependent on imports, with around 75% of the US aluminium’s apparent supply (primary + secondary production + imports–exports + adjustments for stock changes; excludes imported scrap) being primarily met through imports. Canada remains the largest exporter of aluminium to the US, followed by UAE and China.
While China remains the largest producer of primary aluminium, holding approximately 60% of the global production share, India ranks as the second largest producer, contributing around 6%. Unlike steel, India is a net exporter of aluminium. The US accounts for about 6-8% of India’s total aluminium exports, representing a larger share of aluminium exports than steel exports.
Commenting on the on impact of US tariff on the Indian aluminium sector, Sehul Bhatt, director – research, Crisil Intelligence, said, the US move to impose a flat 25% tariff on aluminium imports from March 12, 2025, compared with a raft of lower levies now, will have a negative impact on Indian manufacturers of the metal.
“Nearly half of India’s primary production is currently exported, of which around 6% goes to the US. With users of primary aluminium in that country expected to reduce imports after the 25% tariff kicks in, end users there would prefer locally sourced secondary aluminium, or scrap. This, too, will have a bearing on India because around 26% of the aluminium scrap we import comes from the US. Consequently, we foresee some impact on secondary aluminium and alloys producers as well.”
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