Long-term demand for base metals to remain positive: ICRA

A worker uses a gas cutter at a metal workshop in an industrial area in Mumbai, India, February 10, 2017. REUTERS/Danish Siddiqui - RTX30FXQ

Demand for base metals in the domestic market is likely to remain positive on long-term basis due to investments in infrastructure projects, a report said.

"In the long-term, demand of base metals in India remain positive, driven by investments in infrastructure projects for the power transmission and distribution sector, urban housing and smart city programmes of the government," ICRA said in a report here.

The growth in consumption for aluminium, copper and zinc remained healthy in the first nine months of the financial year 2017 at 10 per cent, 8 per cent and 7 percent, respectively on account of the healthy demand from the power transmission and distribution and the automobile sectors, it said.

However, ICRA said, growth in domestic apparent primary aluminium consumption witnessed a slowdown in third quarter of 2016-17, as a result of the usage of downstream products, which had accumulated during the first six months of the financial year.

The rating agency said that the growth witnessed in refined copper consumption in 9m FY2017 has also experienced a slowdown from the 12 per cent growth registered in FY2016. This slowdown is largely a result of the base effects, it added.

The deficit in the global aluminium market is expected to widen further in CY2017 as a result of up to almost three million metric tonne (MMT) of production cutbacks in China, post the imposition of a new air pollution control regime in Beijing. These guidelines would force alumina refineries and aluminium smelters in provinces around Beijing to cut output by 30 percent from the current levels in the winter months of November through March, ICRA said.

"While the outlook on international aluminium prices is favourable, zinc and copper prices are unlikely to increase significantly from the current levels," ICRA Senior Vice-President and Group Head, Corporate Sector Ratings Jayanta Roy said.