Non-ferrous metal prices to remain firm next quarter: Report
Global non-ferrous metal prices will remain buoyant over the next three months as a result of the widening supply gaps, says a report. There is a widening supply deficit, largely as a result of production setbacks across three key non-ferrous metals, aluminium, copper and zinc, despite muted consumption growths in copper and zinc, an Icra report said today. This has left international non-ferrous metal prices elevated in the current calendar year, which have jumped by 24-35 per cent in the last one year. “While global aluminium production has witnessed a de-growth in the last few months due to the regulatory steps taken in China to control production from polluting sources, copper and zinc output has suffered from issues in mining, production and degradation in the quality of ore,” it said.
According to Icra, “supply situations are unlikely to improve in the next three months. Consequently the deficits are likely to persist, which in turn would keep prices elevated in the near-term.” Higher prices augur well for manufacturers as an improvement in realisation on metal sales has helped non-ferrous metal entities register improved business returns during the January – September 2017 period, however, it is limited by a simultaneous increase in input costs.
The impact of rising input costs is higher for non-integrated players manufacturing aluminium, as there has been a sharp increase in alumina prices. As for the domestic demand-supply scenario, consumption of aluminium, copper and zinc, grew 7-9 per cent growth in the first half of the current fiscal. Despite this, domestic production remains in excess of consumption. The situation is likely to persist going forward as well, which should drive exports.