In a secular collapse of commodities from gold to oil and iron ore to steel, non-ferrousaluminium turns out to be among the worst performers. Aluminium cash prices have drifted to $1,554 a tonne.

The light metal finding application in electricity transmission line to automobile to packaging has hit a six-year low on the back of supply deluge, particularly on account of China and the Gulf, world demand growth not sufficiently large to absorb extra output, and market sentiment damaging big exports by Chinese producers.

BNP Paribas has forecast full-year global demand growth of five per cent for aluminium, even though so far in 2015, consumption rise has remained at four per cent. Based on India's expected gross domestic product (GDP) growth of 7.5 per cent in 2015-16 and 7.6 per cent in the following year, likely good showing by power, construction and automobile industry and higher infrastructure spending, Moody's Investors Service says demand for base metals here, including aluminium, should register a rise of 8-10 per cent annually over the next three years.

Vedanta Aluminium CEO Abhijit Pati laments, "Demand growth of this order is in the realm of possibility. What, however, we are finding disconcerting is that arrivals of foreign origin primary metal and scrap in growing quantities are appropriating any market expansion. Between 2012-13 and last year, domestic sales of aluminium by three producers here were down from 1.38 million tonnes (mt) to 1.26 mt. During this period, however, local aluminium production was up from 1.725 mt to 2.047 mt."

Last year, 319,415 tonnes of foreign origin aluminium products and 860,012 tonnes of scrap found their way into India. What facilitates imports causing distress to domestic producers is low duty of five per cent on primary aluminium and 2.5 per cent on scrap.

The pricing structure for the domestic market is such that aluminium makers have a distinct preference to sell their products here. With cheap imports deluging the domestic market, local producers had compulsion to sell close to 769,075 tonnes of aluminium around the world in 2014-15, up from 344,759 tonnes in 2012-13.

Whether and when there will be safeguard duty discouraging imports rest with the government. But what about London Metal Exchange (LME) aluminium prices? The year to end with surplus of 750,000 tonnes, as foreseen by many agencies, plus a few million tonnes of legacy inventory lying in LME-registered and independent warehouses around the world remain a deterrent to smart price turnaround in the near term.

At current prices, swathes of operating aluminium smelting capacity are incurring losses. As China has done on many occasions in the past to protect its industries, it is offering electricity tariff discount bringing down aluminium production cost by $200 a tonne, value added tax rebate of 13 per cent on exports and favourable terms of credit to aluminium makers. All this has come to aid China's aluminium exports to India and other markets.

In one of the industry's most difficult periods, comes in T K Chand as chairman of National Aluminium Company (Nalco). Though basically a steel man - Chand was earlier a director with Vizag Steel - he had done his homework on aluminium well ahead of assuming the new assignment. This became evident in Chand making bold to meet the press immediately on taking charge of Nalco, a practice not common in the public sector domain. Much to the relief of stakeholders, Chand said his primary focus would be to put to best use the company's "core competence in bauxite mining and electricity generation". Hopefully, there will, then, be continuity in Nalco policy of producing bauxite and refining it as smelter feedstock alumina to optimum capacity and not chase production of aluminium in the present unnerving market conditions.

In fact, accent on mining and alumina business saw Nalco's net profit for 2014-15 double to Rs 1,322 crore. The owner of bauxite deposit with high alumina content of 45 per cent that, at present annual mining capacity of 6.825 mt, will last for 20 years, Nalco is among the world's lowest cost producers of alumina. What, however, could occasionally upset transportation of bauxite from Panchpatmali hills of Odisha's Koraput district to the 2.275 mt refinery at Damonjodi is the ageing 14.6 km cable belt.

This needs quick correction. Chand has promised to cut cost in the chain of aluminium making and bring about productivity improvement. Let him also pursue vigorously with the Odisha government to secure mining lease for 75 mt Pottangi deposit to facilitate building of an additional one mt stream at Damonjodi alumina refinery.