Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Global flat-rolled products (FRP) demand is estimated to grow approximately by 9pc in CY2021, according to Hindalco. Market demand for beverage cans is expected to grow by 3-6pc in CY2021, while demand from automotive is likely to be up by 20-25pc and Aerospace up by 5-10pc on account of recovery and low base effect. 


In the beverage can segment, customer demand is rising globally driven by higher at-home consumption coupled with a shift towards sustainable packaging for beverages. Hindalco is announced significant can manufacturing capacity expansions over the next 2-3 years across regions.


Demand from the automotive sector remains robust with little impact from the semiconductor shortage over the short term. The company expects strong demand led by new program adoption and increased customer preference for SUVs, pick-ups, EVs and premium vehicles. 


In the aerospace industry, despite vaccine rollouts, no significant improvement is expected in air travel in CY2021. Amid overstocked aerospace supply chain, recovery could be delayed and uneven.


India’s FRP demand is expected to recover in a phased manner in Q2 FY2022 with the easing of unlocking and post-recovery from the second wave of COVID-19. Demand from the pharma and food packaging industry is expected to grow but sectors including consumer durables, auto and B&C are expected to face headwinds.



Hindalco’s Aluminium India business produced 319,000mt in Q1 FY2022, up by 9pc from the prior year quarter and up by a percent from Q4 FY2021. Alumina output rose to 718,000mt in Q1, up by 15pc from prior year quarter and up by 3pc from Q4. Aluminum VAP manufacturing increased by 150pc to 86,000mt in Q1 from the prior year but dipped by 3pc from Q4. 


Domestic sales as increased to 44pc compared to 20pc in the prior year quarter, while VAP sales were 27pc of the total metal sales compared to 11pc last year.


Aluminium India’s revenues increased to Rs62.670bn ($843.91mn) in Q1 FY2022, up by 41pc from Q1 FY2021, due to higher global prices of aluminium. EBITDA margins hit a 13-year high of 37.5pc, which continues to be amongst the best in the industry. 



Novelis’ total shipments of FRPs increased to 973,000mt in Q1 FY2022, up by 26pc from Q1 FY2021 supported by strong demand from end markets, mainly beverage packaging and specialty products, which was partially offset by some headwinds in the auto industry.


In Q1, automotive shipments increased by 100pc from the prior year, despite the short supply of semiconductor impacting the automobile industry.


Adjusted EBITDA increased by 75pc to $570/mt in Q1 FY2022 compared to $327 in Q1 FY2021. Excluding the non-recurring tax litigation benefit, Adjusted EBITDA equates to $522/mt in Q1, driven by higher shipments, increase in global aluminium prices and market premiums. 


Revenue rose to $3.9bn in Q1, up by 59pc from the prior year. Novelis’ net Income (excluding tax-effected special items) was $260mn, up 1082pc from a year ago, boosted by higher adjusted EBITDA.



Hindalco successfully ramped up Smelter-3 post shutdown in Q1 FY2022.


Cathode production increased to 63,000mt in Q1, up by 52pc from the prior year, while CC rods output rose by 67pc to 44,000mt.


Sales volumes increased to 80,000mt, up by 36pc from the prior year, while CC Rods sales rose by 50pc to 46,000mt driven by the market recovery.


Segment EBITDA increased to Rs2.610bn, up by 295pc from the prior year. 


Consolidated results

Hindalco’s reported stellar quarterly financial performance in Q1 FY2022 driven by robust performance by Novelis and India business supported by market recovery and improved macros. Consolidated revenue in Q1 increased to Rs413.58bn, up by 64pc from the prior year, while PAT was Rs27.870bn compared to a loss of Rs7.09bn in Q1 FY2021.


Expansion project 

* Recycling and rolling capacity in Pinda, Brazil to be commissioned in Q2 FY2022

* Customer qualifications and ramping as per expectation for automotive finishing plants in Guthrie, Kentucky in the US and Changzhou, China.


Aleris Integration 

* Integration work continues with $100mn run-rate cost synergies achieved in Q1 FY2022

* Expansion project in Zhenjiang, China expected to begin in 2021 with capital investment of $375mn over three years

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