ICRA predicts strong growth in demand for base metals

The Dollar Business Bureau

ICRA predicts that the demand for base metals will remain firm in future as the government is heavily investing in infrastructure. The Smart City Mission will also boost the use of metals like zinc, aluminium and copper as construction activity picks up pace. Massive investments in infrastructure for distribution and transmission of power will further fuel the output of base metals.

During FY 2016-17 (Apr-Nov), the output growth of zinc, aluminium and copper remained high at 7%, 10% and 8% respectively, owing to healthy demand from the power sector and automobile manufacturers.

ICRA also notes that after the deployment of an air pollution control program in Beijing, China is likely to cut down its aluminium production by 3 million tonnes, creating a supply shortage globally, which can be leveraged by India. This development also makes the pricing of the metal attractive in the coming year.

“On the other hand, the gap in the zinc market is expected to remain at the level of CY2016 and the copper market is likely to remain more or less balanced in CY2017,” it said

In 2016, prices of aluminium prices rose by 17% followed by another 12% increase in the first three months of 2017. Although zinc prices also hiked 65% in 2016, the increase in 2017 was subdued to 9%. The case with copper was the same, with a price rise of 18% in 2016 softening to 4% in 2017, ICRA stated.