Companies

Zinc prices drag down profits

Adarsh Gopalakrishnan | Updated on March 12, 2018

Though Hindustan Zinc reported large jumps of 68 per cent and 45 per cent respectively in its sales and net profits for the latest June quarter compared to last year, the stock remained muted on concerns that realisations may be under duress over the next few quarters. Global growth remains precarious and zinc prices are under pressure due to high inventory and surplus production. The recent price correction lowered Hindustan Zinc's sales and net profits by 12 and 16 per cent respectively in the June quarter compared to March.

Zinc prices slipped as much as 16 per cent during the June quarter, though they fell only 6 per cent on an average compared to the March 2011 quarter.

The silver lining was the 21 per cent rise in prices of silver (which accounts for around 10 per cent of sales). In volume terms, the company's silver and lead sales, which account for a fifth of sales, fell by 8 and 12 per cent respectively.

In the months ahead, the outlook for Hindustan Zinc may remain uncertain. Though Zinc prices have gained 13 per cent over the last month, Chinese PMI figures for June once again indicate a slowdown in manufacturing, raising doubts over recovery in metal realisations. Indian zinc consumption remains strong thanks to the recent commissioning of flat-steel production capacity by both JSW Steel and Essar Steel, with Tata Steel expected to follow suit by the end of the ongoing fiscal.

Published on July 21, 2011

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

null
This article is closed for comments.
Please Email the Editor

You May Also Like