While India's increasing import of Russian crude oil has garnered attention, there's another significant development in India-Russia trade that has gone relatively unnoticed. The export of aluminium oxide, also known as alumina, from India to Russia has experienced a remarkable surge. According to the latest available data from the Indian commerce ministry, India's alumina exports to Russia soared to 258,000 tonnes from zero in the corresponding period of the previous financial year.
Similar to the impact on crude oil trade, the shifting global trade dynamics following Russia's invasion of Ukraine in February 2022 have largely contributed to this trend. Russia, being a major producer of aluminium, relies heavily on alumina as a raw material. Alumina is primarily used in the production of aluminium metal but also finds applications as an abrasive due to its hardness and as a refractory material because of its high melting point.
The invasion led to Russia being cut off from major alumina suppliers such as Australia and Ukraine. Both countries decided not to supply alumina to Moscow, with Australia even banning alumina and bauxite exports to Russia, citing their use in the manufacture and development of weapons. Australia has aligned itself with the United States and other Western powers in imposing economic and trade sanctions on Russia. Consequently, other suppliers, including China and India, stepped in to fill the gap left by the absence of alumina from Australia and Ukraine.
India's alumina exports to Russia have risen dramatically, making Russia the third-largest buyer of Indian alumina in terms of both volume and value, surpassing China. In fact, alumina has become the top commodity exported from India to Russia in terms of volume. The value of alumina exports from India to Russia during April-February amounted to $89.87 million, positioning it as the third most valuable commodity exported to Russia from India, as indicated by trade data. By volume, India's alumina exports accounted for 14.4% of total alumina exports to Russia, while by value, they constituted 12.7%.
It's important to note that the Indian commerce ministry releases trade data with a lag, and thus, data up to February has been made available. The data pertains to the Harmonised System (HS) code 281820, which refers to "Aluminium oxide other than artificial corundum."
Prior to the conflict in Ukraine, Russia imported around 275,000 tonnes of alumina from both Ukraine and Australia each month, with the majority consumed by the state-owned aluminium major, Rusal, according to S&P Global Commodity Insights. In February alone, India supplied over 63,540 tonnes of alumina to Russia, partially filling the void left by Ukraine and Australia. Among Indian companies engaged in alumina production, the largest exporter is the public sector player National Aluminium Company (NALCO). In terms of value, India's alumina exports to Russia in February amounted to $21.47 million.
The sharp surge in India's alumina exports to Russia, accounting for over 14% of total exports in this commodity during the first 11 months of the last fiscal year, is a direct consequence of the diminished imports from Russia's traditional suppliers. This development has propelled Russia to become India's third-largest buyer of alumina, surpassing China.
The overall alumina exports from India during April-February experienced a significant 42.5% year-on-year increase to reach 1.79 million tonnes. Besides the additional volumes sent to Russia, exports to the United Kingdom and Oman witnessed substantial growth. Oman maintained its position as the second-largest buyer of Indian alumina, with export volumes increasing from 184,000 tonnes to 521,000 tonnes year on year: The United Arab Emirates, despite a small decline in alumina supplies from India compared to the previous year, retained its position as the top buyer with a volume of 625,000 tonnes. Notably, the United Kingdom, which was ranked seventh in alumina exports from India during April-February of the previous fiscal year, has jumped to the fourth position with a volume of 216,000 tonnes, a significant increase from 31,168 tonnes a year ago.
Conversely, China has slipped to the fifth spot from third place as Indian alumina supplies to the country dropped by three-fourths to 32,811 tonnes. Malaysia also experienced a decline, falling from the fourth to the sixth position as alumina supplies from India decreased by half to 32,144 tonnes during April-February.
It is worth mentioning that despite the surge in alumina exports, India remains a net importer of alumina. In the same period (April-February), India imported a total of 2.20 million tonnes worth $1.03 billion, with Indonesia, Vietnam, and Australia serving as the top three suppliers. Although there was a 5.8% decline in the volume of alumina imports compared to the previous year, the value of imports increased by 2.4%.
The rise in India's alumina exports to Russia and the reshuffling of trade flows can be attributed to the geopolitical events following Russia's invasion of Ukraine. The disruption in traditional supply sources has created an opportunity for India to increase its alumina exports and establish itself as a significant player in the global alumina market. This shift not only benefits India's economy but also provides an alternative source of supply for Russia, reducing its dependence on countries that have imposed sanctions.
The increased alumina trade between India and Russia not only signifies a commercial opportunity but also underscores the evolving dynamics of global trade in the face of geopolitical tensions. As countries navigate political complexities, trade patterns are constantly reshaped, opening doors for new players and altering the landscape of global commerce.
In conclusion, the surge in India's alumina exports to Russia highlights the changing trade dynamics between the two countries. The disruption in traditional supply sources and the imposition of sanctions on Russia have provided an opportunity for India to become a significant exporter of alumina to Russia. This trend reflects the adaptability and resilience of global trade in response to geopolitical events, emphasizing the importance of diversification and the emergence of new trade partnerships.
