Product Gujarat Foils

Published:

The project in the course of marketing is carried out to make us aware of the product and take a survey “how many customers prefer the Gujarat foils product or why?”

The analysis of the company is done from the point of view of the questionnaire and dealer feedback about the company.

Objective

Of The Study

The project undertaken by me in Gujarat foils ltd, New Delhi was to study the “Marketing Strategies” of the industry. The study of these strategies developed the practical experience in which enhanced my creativity and comprehensiveness.

As it has been said truly that practical knowledge makes the person more capable, comprehensive and helps to enhance his/ her creativity. Along with the theoretical data the exposure of practical life situation existing in the corporate is very much needed.

The objective of my study was also to develop some practical experience in the training period. I learned a lot about marketing working in the organization that helps a lot a in the effective and efficient achievement of the goals.

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My main aim was to:

  • Gain some practical knowledge.
  • Study the applications of the concept of marketing in the real business world.
  • Analyse the marketing strategies
  • The degree of effectiveness of these strategies.
  • Recommend suggestions for increasing the effectiveness of the working of organization.

Methodology

SOURCE:

It was decided that necessary information for the study could be obtained from the staff level and concerned officers of the marketing department.

INSTRUMENT:

Major instrument for acquiring the information was a catalogue of the company and discussion to concerned officers.

FIELD WORK:

The collection of data was during the period of 20-05-2008 to 15-007-2008 very well the Employees working in the industry gave cooperation.

GUJARAT FOILS LIMITED.

COMPANY PROFILE

Gujarat Foils Ltd. incorporated in 1992 for the manufacture of aluminum rolled products and commenced its business by setting up the project of 3600 tons annual capacity with State of Art Plant & Machinery and an initial capital cost of Rs. 303 lacs. The plant is situated at Chhatral, on the Ahmedabad -Delhi Highway in India on a 16000 Sq. Meters Plot of land in G.I.D.C., with sufficient power supply, efficient & skilled work force of 50 person and easy excess to the national highway.

In the ten year of its existence the company has established its own Brand Equity in the Indian Aluminum product market with it's wide range of rolled products, QUALITY, Customer confidence for maintaining the Delivery Schedules and providing satisfactory services to the wide base of Clients.

Management:

Initially installed and made public under Patel group and Shri N Kajiwala, Director Technical, a hardcore technocrat from BITS Pilani, was subsequently taken over by Sh. Pramod Jain, Chairman & M.D., and is growing rapidly under his able command and guidance. Present promoters of the company have a long experience and multi-locational set-up in the trading of aluminum products in North India and also have a dealership of HINDALCO in Delhi. The company in effect getting the benefit of Best of Both Worlds - Commercial and Marketing acumen of the CMD and the vast technical and Production expertise of the Technical Experts and associated team.

Technical Team:

The Technical Expert, Er. B. D. Sarkar is Metallurgy Engineer 25 years long experience in Aluminium Rolling as well as conversion and lamination. Before joining as the head of the experienced team of Gujarat Foils Ltd. he worked as the production head for the companies which are the aluminium rolling giants in India like Balco, Sterlite Industires, and some other rolling mills.

Product:

Gujarat Foils Ltd. has a product range of Finstock, Pilfer Proof Caps in coil & sheet form of various thickness & sizes.

  • Finstock:

Thickness ( in mm.) : 0.10 to 0.30

Width ( in mm.): 50 - 1000

Coil Weight ( Kgs.) : Max. 1000

Temper : As reqd.

  • Pilfer Proof Cap:

Thickness ( in mm. ) : 0.15 - 0.23

Width ( in mm.) : as reqd.

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Coil Weight ( Kgs.): Max. 1000

Temper : Half Hard.

  • Coils:

Thickness ( in mm.): 0.10 to 0.70

Width (in mm.) : 50 to 1000

Coil Weight ( Kgs.) : Max. 1000

Temper : As reqd.

  • Tagger & Pharma Foil:

Thickness (in micron): 40 to 70 (Pharma Foil: 40 micron)

Width (in mm.) : As reqd.

Coil Weight (Kgs.) : Max. 200

Temper : As reqd.

These products also available in the cut sheet sizes as per requirement.

Market:

Gujarat Foils Ltd. product is widely acceptable in the market and it has its own BRAND EQUITY for the quality it maintains. At present the Company is catering to the market of such products in Ahmedabad, Delhi, Bombay, Nasik, Pune, Indore, Kolhapur, Banglore etc. the company has a full-fledged marketing office at Delhi.

Growth & Financial Highlights:

After overcoming from its initial transition phase the company is growing with great pace.

The following figures are self-indicative: -

Year

Sales (million Rs.)

1998-1999

132.0

1999-2000

212.4

2000-2001

302.2

2001-2002

385.2

2002-2003

486.6

2003-2004

599.3

Chart 2: LME prices and inventory

Gujarat Foils Ltd. is now getting into the Global Market, and has already executed orders worth Rs.1.5 Million through Merchant Export House as a supporting manufacturer. Plans for overseas forays are afoot and the company has set to achieve a target of 300 Mts. of Aluminum Products during the current financial year. Company also in the phase to develop some new ranges of the products to cater different segments of the market demand. Various Tie-ups and other negotiations are already under advanced stage of implementation.

SWOT ANALYSIS

Strengths:

Largest Integrated aluminium player in India.

Ability to produce 1000 tonnes in month.

Presence in good quality products in the aluminium sheet.

Large quantity of high quality reserves

Low labour and conversion costs.

Weakness:

Lack of R&D programs and training and development.

More Competiton in the market

Opportunities:

Company to invest 120 crore for capacity expansion.

Import to the product at low price in china as compared to India

To set up or installed a machinery in the company

Threats:

Fluctuation in aluminium prices threat as it depend on the LME.

Aluminium Industry

Profile of the Aluminium industry

Aluminium Industries in india is one of the leading industries in the Indian economy. The growth of the aluminum Metal industry in India would be sustained by the diversification and exploration of new horizons for the industry. India has huge deposits of natural resources in form of minerals like copper, chromite, iron ore, manganese, bauxite, gold, etc. The India aluminum industry falls under the category of non iron based which include the production of copper, tin, brass, lead, zinc, aluminum, and manganese. The main operations of the of the India aluminum industry is mining of ores, refining of the ore, casting, alloying, sheet, and rolling into foils. At present, Hindalco and Nalco are one of the most economical in the production of aluminum in the world. For the sustenance of the growth the aluminum industry in India has to develop research and development units to assist the production and improve on the quality measures to keep a stringent quality control. The India aluminum Metal Industries sector in the previous decade experienced substantial success among the other industries. The India aluminum industry is developing fast and the advancement in its technologies is boosting the growth even faster. The utilization of both international and domestic resources was significant in the rapid development of the India aluminum industry. This rapid development has made the India aluminum industry prominent among the investors. The India aluminum industry has a bright future as it can become one of the largest players in the global aluminum market as in India the consumption is fairly low, the industry may use the surplus production to cater the international need for aluminum which is used all over the world for several applications such as aircraft manufacturing, automobile manufacturing, utensils, etc. The Aluminium industry is highly concentrated, with just five plants accounting for the entire production capacity of 7,02,000 tonnes per annum.There are five major companies.

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BALCO

HINDALCO

NALCO

INDAL

MALCO

The per capita consumption of aluminium in India is only 0.5 kg as against 25 kg. In USA, 19 kg.In Japan and 10 kg. in Europe. Even the World's average per capita consumption is about 10times of that in India. One reason of low consumption in the country could be that consumption Pattern of aluminium in India is vastly different from that of developed countries. The demand of Aluminium is expected to grow by about 9 percent per annum from present consumption levels. This sector is going through a consolidation phase and existing producers are in the process of enhancing their production capacity so that a demand supply gap expected in future is bridged.

However, India is a net exporter of alumina and aluminium metal at present.

Salient features of Indian Aluminium Industry

· Highly concentrated industry with only five primary plants in the country

· Controlled by two private groups and one public sector unit

· Bayer-Hall-Heroult technology used by all producers

· Electricity, coal and furnace oil are primary energy inputs

· All plants have their own captive power units for cheaper and un-interrupted power

supply

· Energy cost is 40% of manufacturing cost for metal and 30% for rolled products

· Plants have set internal target of 1 - 2% reduction in specific energy consumption in the

next 5 - 8 years

· Energy management is a critical focus in all the plants

· Two plants have declared formal energy policy

· Each plant has an Energy Management Cell

· Achievements in energy conservation are highlighted in the Annual Report of the

company

· Energy targets are based on best energy figures achieved in their sector / region and by

the plant itself in the past

· Generally, government policies were rated as conducive to energy management.

· High cost of technology is the main barrier in achieving high energy efficiency'

Quantitative details:

Raw material and product type:

Bauxite and calcined petroleum coke are primary raw materials for this industry. However, Alumina is raw materials for smelters and aluminium metal is raw material for fabrication units.

Fuel Usage:

Coal, Furnace oil and electricity are primary energy inputs in aluminium production. Coal is primarily used to generate steam, which is used in the process while fuel oil is mainly used in calcination of alumina and various furnaces in fabrication plants. Electricity is the major energy input in aluminium production and is considered to be prime factor in determining economics of aluminium production. Hence, all primary metal producers have installed their own captive power plants to supply cheaper and uninterrupted power for their use. Majority of electricity consumed in this industry is supplied by their captive power plants.

Technology Status:

Invented over 100 years ago, Bayer-Hall-Heroult is the only available commercial technology, even today, for the production of aluminium. Alumina is the basic raw material for the production of aluminium metal through electrolytic process. The production of alumina obtained from bauxite, a mineral containing upto 60% in the form of mono/tribhydrate is carried out through the Bayer route, which is an extractive hydro-metallurgical process.

Aluminium production slowing down….

Aluminium production grew by just 2.3% in December 2000 as compared to a growth of 10.4% in the same period last year. In November 2000, the production was up by7.6%. For the period April-December 2000, the production has increased by 6.1%yoy as against the 15.3% growth exhibited in the previous year. The main reason for slowing down of aluminium production growth is the decrease in demand from the automobile industry.

Table 1: Production (in tonnes)

Production

Dec-00

Dec-99

% Change

Apr-Dec 2000

Apr-Dec 99

% Change

Aluminium

55933

54693

2.27

485106

457134

6.12

Chart 1: Aluminium Production

Aluminium prices firm up

Aluminium ingot prices in Mumbai continue to remain firm. The average price of ingots during the first week of February was Rs 9650/quintal. The average price of ingots during the period April-January of 2000-2001 was 7.6% higher than the average price during the corresponding period last year. Aluminium prices have rallied in the last one-month.

While the macroeconomic factors are not conducive to a rally in prices, further likely closure of capacities in North America in the face of high-energy prices has pushed up aluminium prices.

Chart 2: LME prices and inventory

Q3FY01 performance

  • Nalco's net profit rose by 22% at Rs 1920.1mn against Rs 1577.6mn in the same period last year. The company has reduced the prices of some its products like ingots, sows and cast strips so as to protect its market share in the domestic aluminium industry.
  • The net profit of Indal shot up by 119% to Rs 306.8mn as against Rs 139.9mn in the same period last year mainly due to improved production from most of its units and also a continuous focus on exports.
  • Hindalco registered a net profit growth of 11.7% from Rs5,022mn in Q3FY2000 to Rs5,611mn in Q3FY01. 39% increase in exports from Rs751mn to Rs1,045mn has driven the profit growth in this quarter. Exceptional performances of Chemicals and Sheets division have helped drive export volumes.

Table 2: Q3FY01

(Rs mn)

Name of the company

Sales

Operating profit

PAT

Nalco

5742

3394

1920

Indal

3253

698

307

Hindalco

5611

2975

1700

ALUMINIUM

Production Process

Aluminium can be produced via two different routes: primary aluminium production from ore and recycling aluminium from process scrap and used aluminium products. The production of primary aluminium consists of three steps: bauxite mining, alumina production and electrolysis. The last two mentioned will be described hereafter; bauxite mining is covered in the section Environment, Ecology & Recycling.

Alumina production

Bauxite has to be processed into pure aluminium oxide (alumina) before it can be converted to aluminium by electrolysis. This is achieved through the use of the Bayer chemical process in alumina refineries. The aluminium oxide is released from the other substances in bauxite in a caustic soda solution, which is filtered to remove all insoluble particles. The aluminium hydroxide is then precipitated from the soda solution, washed and dried while the soda solution is recycled. After calcinations, the end product, aluminium oxide (Al2O3), is a fine-grained white powder. Four tonnes of bauxite are required to produce two tonnes of alumina, which in turn produces one tonne of aluminium at the primary smelter. In 1998, 45 million tonnes of alumina were produced worldwide. The main production areas are: Alumina refineries are often located near to bauxite mines for logistics reasons.

Electrolysis

Aluminium primary smelting and casting Primary aluminium is produced in reduction plants (or "smelters"), where pure aluminium is extracted from alumina by the Hall-Héroult process. The reduction of alumina into liquid aluminium is operated at around 950 degrees Celsius in a fluorinated bath under high intensity electrical current. This process takes place in electrolytic cells (or "pots"), where carbon cathodes form the bottom of the pot and act as the negative electrode. Anodes (positive electrodes) are held at the top of the pot and are consumed during the process when they react with the oxygen coming from the alumina. There are two types of anodes currently in use. All potlines built since the early 1970s use the prebake anode technology, where the anodes, manufactured from a mixture of petroleum coke and coal tar pitch (acting as a binder), are ‘pre-baked' in separate anode plants. In the Soederberg technology, the carbonaceous mixture is fed directly into the top part of the pot, where ‘self-baking' anodes are produced using the heat released by the electrolytic process. At regular intervals, molten aluminium tapped from the pots is transported to the cast house where it is alloyed in holding furnaces by the addition of other metals (according to the user's needs), cleaned of oxides and gases, and then cast into ingots. These can take the form of extrusion billets, for extruded products, or rolling ingots, for rolled products, depending on the way it is to be further processed. Aluminium mould castings are produced by foundries which use this technique to manufacture shaped components. World-wide trends in production are shown in the following graph. Aluminium output has increased by a factor of 13 since 1950, making aluminium the most widely used non-ferrous metal. In 1998, worldwide production of primary aluminium was about 22.7 million tonnes per year for and installed capacity of 24.8 million tonnes.

The Hall-Heroult method of aluminium production occurs in large refractory-lined steel containers called pots that are connected in series and housed in long buildings called pot rooms. Alusaf has seven such pot rooms producing over 670 000 tons of aluminium a year.

A. Suspended above each cathode are several closely arranged carbon blocks that serve as the anode (positive electrode). The anodes are suspended by rods in the bath of molten electrolyte in which the alumina is dissolved.

B. An electric current of up to 315 000 amps enters the pot via the anode blocks and reduces the alumina by electrolysis into aluminium and oxygen. The oxygen is deposited on the carbon anode where it burns the carbon to form carbon dioxide. The aluminium, being heavier than the electrolyte, collects at the base of the pot. The equation for the basic reaction is:

2Al2O3 + 3C = 4Al + 3CO2

C. Each pot consists of a steel shell that is lined with refractory and carbon blocks to serve as the cathode (negative electrode).

D. Cryolite, the predominant constituent of the electrolyte, is a sodium aluminium fluoride salt which, when held molten at a temperature of around 960°C, can dissolve alumina.

The electrolytic process of separating the Alumina atom into molten Aluminium and Carbon dioxide waste

To sustain the electrolytic process, alumina is fed into the pots at regular intervals to maintain a sufficient quantity of dissolved alumina in the bath. The process is controlled by a computer that detects and interprets minute changes in electrical resistance and determines when to feed alumina to the pot. As the carbon anode is gradually consumed, it is periodically lowered to maintain the optimum distance of ±5cm between the anode and cathode surfaces.

For each ton of aluminium produced about 430 kg of carbon is consumed. A continuous supply of anodes is manufactured at both smelters in dedicated carbon plants that comprise paste plants, carbon bake furnaces and rodding shops. 1. In the paste plants, carefully crushed and graded fractions of calcined petroleum coke and recycled anode butts are heated and mixed with molten pitch. 2. The hot mixture is then compacted into blocks called green (unbaked) anodes. At Hillside, each anode weighs about 836 kg; at Bay side the anodes weigh about 624 kg. Approximately 400 000 anodes are produced each year for both smelters. 3. The green anodes are transferred to the carbon bake furnaces where they are heated in deep brick-lined pits to around 1 100ºC over a period of 21 days. This baking process calcines the binding pitch and ensures that the anodes have good thermal and electrical conductivity. Exhaust manifolds collect waste gases and carry them to the fume treatment centre. 4. After baking, aluminium rods are attached to the anodes and sealed with cast iron. The rod suspends the anode in the pot and acts as an electrical conductor. 5. After the rods are attached, the anodes are delivered to the pot rooms for positioning in the pots. Some 27 days later, the remains of the anodes, known as butts, are returned from the pot rooms and recycled. The rods are also reused.

1. The molten metal is tapped from each pot approximately once per day for transfer in special-purpose hot-metal carriers to holding furnaces in the cast house. The furnaces are heated and maintain the aluminium at the desired casting temperature of 700ºC. 2. After the aluminium is poured into cast house. furnaces, elements such as silicon, magnesium, copper, iron, titanium or boron are added to meet requisite alloy specifications. The metal surface is skimmed to remove the dross. The clean alloy is then cast. 3. Forty-four 22-kg ingots are stacked in a configuration of interlocking bundles. Each weighing one ton, they are strapped and trucked to the export stockyard at the harbor in an around-the-clock road haulage super packs for easy handling.

The electrolytic production of aluminium at the smelters is a complex 24-hours-a-day, 365-days-a-year process, dependant on a regular supply of raw materials and huge amounts of energy. Crucially important is the role of the ancillary departments that must ensure an uninterrupted supply of quality raw materials, spares, consumables or services to the three primary production areas - carbon, pot rooms and cast house. The ancillary departments include maintenance, procurement, materials management, laboratory, environment, finance, human resources, engineering, sales and marketing, communication and information systems. The warehouses contain tens of thousands of parts necessary for the continued functioning of the smelters. While certain specialised parts are purchased abroad, Billiton Aluminium's purchasing policy gives preference, on a competitive basis, to local suppliers and contractors. Preventative maintenance is a key factor in the successful operation of the smelter. Effective planning and organisation of maintenance work prevents production backlogs, keeps equipment in top condition and ensures that productivity remains high. Integrated information and technology systems are vital to Hillside's success as the focus of organisations worldwide turns to knowledge as a prime source of wealth creation. Designed for maximum effectiveness, the company's three-level information network is fully integrated and encompasses programmers to operate equipment, monitor performance and provide status reports. It also manages the business systems for finance, maintenance and human resources.

Aluminium ore, most commonly bauxite, is plentiful and occurs mainly in tropical and sub-tropical areas: Africa, West Indies, South America and Australia. There are also some deposits in Europe. Bauxite is refined into aluminium oxide tri hydrate (alumina) and then electrolytically reduced into metallic aluminium. Primary aluminium production facilities are located all over the world, often in areas where there are abundant supplies of inexpensive energy, such as hydroelectric power.

Two to three tonnes of bauxite are required to produce one tonne of alumina and two tonnes of alumina are required to produce one tonne of aluminium metal.

The aluminium industry relies on the Bayer process to produce alumina from bauxite. It remains the most economic means of obtaining alumina, which in turn is vital for the production of aluminium metal - some two tonnes of alumina are required to produce on tonne of aluminiu

The Bayer Process

The primary aluminium industry is dependent on a regular supply of alumina for four functions: Basic raw material for aluminium production 1.Thermal insulator for the top of electrolytic cells 2.Coating for pre baked anodes 3.Absorbent filter for cell emissions Alumina Production

Bauxite is washed, ground and dissolved in caustic soda (sodium hydroxide) at high pressure and temperature. The resulting liquor contains a solution of sodium aluminate and un dissolved bauxite residues containing iron, silicon, and titanium. These residues sink gradually to the bottom of the tank and are removed. They are known colloquially as "red mud". The clear sodium aluminate solution is pumped into a huge tank called a precipitator. Fine particles of alumina are added to seed the precipitation of pure alumina particles as the liquor cools. The particles sink to the bottom of the tank, are removed, and are then passed through a rotary or fluidised calciner at 1100°C to drive off the chemically combined water. The result is a white powder, pure alumina. The caustic soda is returned to the start of the process and used again. More information about the Chemistry of the Process is available. The process of producing pure alumina from bauxite has changed very little since the first plant was opened in 1893. The Bayer process can be considered in three stages:

Extraction

The hydrated alumina is selectively removed from the other (insoluble) oxides by transferring it into a solution of sodium hydroxide (caustic soda): Al2O3.xH2O + 2NaOH ---> 2NaAlO2 + (x+1) H2O The process is far more efficient when the ore is reduced to a very fine particle size prior to reaction. This is achieved by crushing and milling the pre-washed ore. This is then sent to a heated pressure digester. Conditions within the digester (concentration, temperature and pressure) vary according to the properties of the bauxite ore being used. Although higher temperatures are theoretically favored these produce several disadvantages including corrosion problems and the possibility of other oxides (other than alumina) dissolving into the caustic liquor. Modern plants typically operate at between 200 and 240 °C and can involve pressures of around 30atm. After the extraction stage the liquor (containing the dissolved Al2O3) must be separated from the insoluble bauxite residue and purified as much as possible and filtered before it is delivered to the decomposer. The mud is thickened and washed so that the caustic soda can be removed and recycled.

Decomposition

Crystalline alumina tri hydrate is extracted from the digestion liquor by hydrolysis: 2NaAlO2 + 4H2O ---> Al2O3.3H2O + 2NaOH This is basically the reverse of the extraction process, except that the product's nature can be carefully controlled by plant conditions (including seeding or selective nucleation, precipitation temperature and cooling rate). The alumina tri hydrate crystals are then classified into size fractions and fed into a rotary or fluidised bed calcination kiln.

Calcination

Alumina tri hydrate crystals are calcined to remove their water of crystallisation and prepare the alumina for the aluminium smelting process. The mechanism for this step is complex but the process, when carefully controlled, dictates the properties of the final product

Aluminum Consumption

Main primary aluminum manufacturing countries

China

- Production: Primary aluminum has been produced most in the world (6 million tons) with the most demand in the world (about 6 million tons) as well. It is also expected that aluminum production would exceed domestic demand in the next 1-2 years. As a result, China begins to export aluminum to the world market during such period. However, after the year 2007, it is expected that consumption would exceed production volume again and China would become the aluminum net importer.

- Resources: Source of bauxite is about 2.3 trillion tons, which is 2% of all sources in the world. But the quality of bauxite texture is not good enough to smelt to alumina. So, China needs to import alumina mainly from Australia and India. The important primary aluminum production company is Chalco, which Chinese government holds 72% of its share.

- Consumption: Aluminum consumption rate increases by 14% in 1998-2001. When compared with the world in the same period (excluding China), it is 3.9% from the growth of construction and motor vehicle industries, and electrical energy production, which is highly demanded continuously. China, at present, has higher growth of basic industries (Metal Intensive), as compared with Japan in 1947 or Korea in 1957 but the size is much larger. More than 80% of aluminum consumption in China is used in the construction business. Recently, demand might be rapidly higher due to Olympic 2008-construction project. Projects under the construction are 42 race fields and 50 hotels, etc. In the developed countries, aluminum application in construction industry has only 30%, whereas another 70% has been used in other industries. To achieve this, China might have to take no less than 30-40 years, at least. At present, China consumes 2-3 kilograms of aluminum per person and compared with the U.S., which consumes 35 kilograms/person. It can be seen that the trend of consumption demand for aluminum in China remains high.

- Affecting Factor: There is a problem of electrical energy shortage in the west and south of the country. Such areas have the production of primary aluminum in half of all production capacity. China has expedited the problem solving and it is expected to succeed in 2011.

- According to China's access to WTO, China tries to close the pure aluminum smelters with pollution problem. These factories have the total production capacity of 450,000 tons. The factories with the production capacity of less than 50,000 tons will be closed down because of their ineffective productions, and most of them are old factories and use technology causing more pollution. In addition, there are problems of electrical energy shortage and source of alumina raw material that need to be imported from abroad. Moreover, the Chinese government has used a measure to restrict alumina import to decelerate the rapid expansion of primary aluminum production to prevent over production capacity problem. Therefore, it seems far from possibility that China would become the exporting country of aluminum and affect the global market like Russia did in the past (in 1992). At present, China uses tax measure to restrict aluminum export at 5% and, in October 2004, Ministry of Commerce of China announced the restriction for aluminum smeltery with the production capacity of less than 100,000 kilograms/year. It prohibited the direct import of alumina raw materials, which have to import through large smeltery. This would increase the production cost of small aluminum smeltery. As a result, China's export might not change much from last year to maintain the balance of demand for domestic aluminum consumption and alleviate the problem of electrical energy shortage in the country.

United States of America

- Production and Import - Export can be shown in the table below.

Production

2003 (1,000 tons)

2004 (1,000 tons)

Primary Aluminum

2,700

2,500

Secondary Aluminum

1,070

1,200

Import

Canada (58%), Russia (18%)

4,130

4,300

Export

Canada (51%), Mexico (20%), China (16%)

1,540

1,700

Source : U.S. Geological Survey, Mineral Commodity Summaries, January 2005

- Domestic Consumption: total 6.5 million tons, classified as follows.

2004 (100%)

Transportation

35%

Packaging

24%

Building

16%

Consumer durables

8%

Electrical

7%

Others

10%

Situation of Aluminum in Thailand

In Thailand, there are 3 production processes. However, in the basic production, there is only melting the aluminum from metal scrap, which is Secondary Aluminum. There is no primary aluminum production because of shortage of bauxite raw material sources and high electricity expenses in the country, which is not worth commercially investing.

Production

Aluminum industry in Thailand can be classified into 3 groups based on production process.

1)Primary producers - factories purchase metal scrap and aluminum waste as raw materials for re-melting to be unwrought or wrought aluminum then casting, according to the needs of related industries.

2)Intermediate producers - can be divided into 2 groups that are extrusion factory and aluminum sheet factory, such as aluminum sheet and foil producers, cut-off string aluminum, electrical wire producers, casting and die casting factories.

3)Final producers - producers who purchase and use the aluminum sheet as raw materials to produce consumer products. The examples are beverage can and packaging producers, container producers, building decorative item, banners etc.

Problem of Production

Problem is a lack of upstream industry that is the production of primary aluminum, so Thailand needs to rely on import of semi-finished raw materials (unwrought aluminum) and re-melting the aluminum scrap and waste (secondary aluminum). However, the quality of aluminum obtained from re-melting the aluminum scrap is not quite purified because of no electrical sorting process to make it more purified.

The campaign of aluminum storage for recycle has not been successful. Primary producers, which are smelteries, are still facing the shortage of raw materials that are insufficient aluminum scrap. Therefore, import from abroad is needed even though the domestic circulation quantity is about 100,000 tons per year, which can substitute to some extent. The wrought aluminum factories, such as rolling, pressing, extrusion factories, foundry etc., will always leave metal scrap. Most of these factories do not have their own furnaces, so they will sell metal scraps by auction to metal scrap dealers or smelteries or make the contract with aluminum raw material suppliers to resell them to be re-melted. Aluminum scrap from this industrial factory has good quality (New Scrap). Due to no systematic storage of old scrap and high price of aluminum scrap in overseas, the aluminum scrap is continuously exported every year.

Foreign Market

Import

Table 1: Comparison of aluminum import quantity in 2003 and 2004

QTY: Metric Ton, VALUE: Million Baht

Products

2002

2003

2004

% Changing rate

QTY

VALUE

QTY

VALUE

QTY

VALUE

QTY

VALUE

Important source of import

Scrap

17,602

890

22,364

1,158

31,177

1,767

39.4

52.5

Singapore, U.S., UK

Unwrought

259,323

16,343

330,317

20,128

417,669

28,091

26.4

39.5

Australia, UAE, Russia

Powders & Flakes

671

62

864

78

1,021

75

18.7

-3

Germany, Austria, China, Japan

Bars, Rods, Profiles

2,615

359

4,278

575

4,140

679

-3

18

Japan, Indonesia, Bahrain, China

Wire

2,741

314

2,634

311

3,258

366

23.7

17.7

France, Netherlands

Plates, Sheet, Strip

61,025

6,805

70,755

7,804

80,948

9,354

14.4

19.9

Japan, Korea, Australia

Foil

21,685

3,693

26,570

4,290

33,274

5,492

25.2

28

Japan, Korea, Malaysia

Tubes, Pipes, Fittings

2,160

743

2,391

890

3,090

1,102

29.3

23.8

Japan, Malaysia, South Korea

Structures

NA

262

NA

231

NA

494

-

114

China, Malaysia, South Korea, Indonesia

Container, packaging

NA

612

NA

787

NA

829

-

5.3

France, Italy, Denmark

Household

articles and Sanitary ware

NA

75

NA

74

NA

128

-

73

Taiwan, South Korea, China

others

NA

9,456

NA

11,571

NA

11,222

-

-3

Japan, China, Singapore

Total

367,822

39,614

460,173

47,897

574,577

59,599

24.8

24.4

Japan, Australia, China

Source: 1. Industrial Economics Information Center, Office of Industrial Economics

2. The Customs Department

From the aluminum import quantity table in 2004, compared with 2003, the overall import has increased in all categories. The most imported product is unwrought aluminum with the import value of 28,091 million baht from the total import value of 59,599 million baht or 47% of total import value. Thailand's main aluminum import markets are Japan, Australia and China respectively, unchanged from year 2003.

Export

Table 2: Comparison of aluminum export quantity in 2003 and 2004

QTY: Metric Ton, VALUE: Million Baht

Products

2002

2003

2004

% Changing rate

QTY

VALUE

QTY

VALUE

QTY

VALUE

QTY

VALUE

Important source of export

Scrap

15,320

708

17,560

737

20,662

944

17.6

28

Japan, South Korea, China

Unwrought

9,674

586

6,905

452

12,312

902

78.3

99.5

Indonesia

Powders & Flakes

11

2

143

10

161

12

12.6

20

U.S., Australia

<

Bars, Rods, Profiles

13,949

1,020

17,052

1,224

22,488

1,746

31.9

42.6

Hong Kong, India, Vietnam, Australia

Wire

167

11

149

11

347

14

132.8

27.3

Burma, Singapore, Vietnam

Plates, Sheet, Strip

3,870

372

7,612

664

9,926

1,022

30.4

54

Japan, Malaysia

Foil

2,320

341

2,321

346

3,526

544

52

57.2

Malaysia, Philippines, Indonesia

Tubes, Pipes, Fittings

1,764

458

2,342

533

2,808

665

19.9

24.7

Malaysia, Indonesia, UK

Structures

NA

5,406

NA

6,873

NA

9,125

-

32.7

Japan

Container, packaging

NA

1,478

NA

1,439

NA

1,887

-

31.1

Malaysia, Japan

Household articles and Sanitary ware

NA

4,284

NA

3,706

NA

4,001

-

7.9

U.S.

Others

NA

1,864

NA

1,635

NA

3,042

-

86

Japan, Netherlands, Hong Kong, Philippines

Total

47,075

16,530

54,084

17,630