Auto, defence sectors may see price rise as West Asia crisis halves aluminium output

The aluminium extrusion industry has urged the government to reduce customs duty on raw materials from 7.5% to zero to help curb rising costs linked to the West Asia crisis.

Ankur Aggarwal, Secretary of the Aluminium Extrusion Manufacturers Association of India, told CNBC-TV18 that the conflict has disrupted supply chains, as the region is a primary source of secondary raw materials for the midstream industry.

He noted that the cost of secondary aluminium (LME-linked) from West Asia has increased from $3,000 per tonne to $3,500 per tonne, with operations at smelters in Qatar, United Arab Emirates, and Bahrain affected by the conflict.

With production in the aluminium extrusion sector declining from 1 lakh tonnes per month to around 50,000–60,000 tonnes, Aggarwal said that industries such as automotive, defence, orthopaedic equipment, and bicycle manufacturing may see price increases.

He added that if the West Asia conflict persists, prices of downstream products are likely to rise in the coming months, even as the industry attempts to shift from oil and gas to electricity in response to higher energy costs.

Aggarwal also pointed out that much of the machinery used in the sector is sourced from China. However, the industry is facing difficulties in maintaining this equipment due to a shortage of visas for Chinese professionals. He urged the government to facilitate visas for Chinese engineers and operators to ensure seamless operations.