November 09, 2012 / 16:14 IST
ICRA expects the near term demand outlook for non ferrous metals to remain soft, due to the prevailing sluggish macro-economic conditions globally. Mr. Jayanta Roy, Senior Vice-President and Co-Head, Corporate Sector Ratings, ICRA stated “With China being the leader in the production and consumption of aluminium, copper and zinc, the moderation in Chinese industrial output over the last few quarters as well as the subdued outlook for the mature economies have impacted the demand and prices of these metals.”
Global aluminium consumption during the first half of the current calendar year grew by around 3% as against a growth rate of 7% in 2011. However, in the domestic market, growth in consumption of aluminium continues to outpace production growth, resulting in the country remaining a net importer of aluminium. "The scenario is however expected to change in the medium to long term, with large capacity expansions currently being undertaken by the primary aluminium players, which is estimated to outweigh the anticipated growth in demand and create surplus capacity in the domestic market” adds Mr Roy. Industry conditions continue to remain challenging for the domestic primary aluminium players because of input cost pressures and depressed metal prices. Any upward movement in prices would be largely dependent on the health of the Chinese economy and the steps taken by the country to boost demand.While the near-term demand outlook for copper is also weak, supply constraints globally are expected to provide a support to prices. Over the medium-term, however, copper prices may moderate gradually on the back of expected capacity additions, with the pace of consumption growth depending primarily on the recovery in macro-economic environment, especially in China. On the other hand, zinc prices, which are expected to remain soft in the near term, are likely to harden over the medium-to-long term due to mine depletions and a gradual fall in ore grade.The primary base metals industry in India is highly concentrated, with the presence of a few large players, while the downstream segment is fragmented and faces margin pressures. With the consumption of these metals in India accounting for a small share of the total consumption world-wide, Indian players have limited influence on the global demand-supply scenario.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
