Outlook for non-ferrous metals weak in near-term, says ICRA

Near-term demand outlook for non-ferrous metals is likely to remain subdued due to continuing global economic sluggishness, an ICRA report said.

“With China being the leader in production and consumption of aluminium, copper and zinc, a moderation in Chinese industrial output over the last few quarters as well as subdued outlook for mature economies have impacted demand and prices of these metals,” Jayanta Roy, Senior Vice-President and co-Head of Corporate Sector Ratings, ICRA said.

On aluminium consumption, the report said that global aluminium consumption during the first half grew around 3 per cent compared to 7 per cent a year ago. The report, however, noted that aluminium consumption in the domestic market continues to outpace production, making the country a net importer of the commodity.

“The domestic 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 anticipated growth in demand and create surplus capacity,” he said.

The report said that any decision to revise aluminium price upwards will depend on the Chinese economy and steps taken to boost the domestic economy. It said that near-term outlook for copper remains weak, but added that the supply constraints are likely to provide support to prices.

Talking about medium-term outlook, the report said, that “Copper prices may moderate gradually on the back of expected capacity additions, with the pace of consumption growth depending primarily on recovery in the macroeconomic environment, especially in China”.

It also said that zinc prices are likely to remain soft in the near-term and may harden over medium-to-long-term due to mine depletions and a gradual fall in ore grade.

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