Non-ferrous metals see correction

Kolkata: International prices of the three non-ferrous metals, that is, aluminium, copper and zinc have witnessed corrections of 13 per cent, 7 per cent and 16 per cent respectively in the last one year over global macroeconomic uncertainties.

The global consumption growths of these metals also registered a slowdown in CY2018 and, going forward, growth is expected to remain muted in the current calendar year as well. Despite muted consumption levels, the markets of the three key non-ferrous metals were in deficits in CY2018 and the shortage expanded on a YoY basis, as production growth was even lower than growth in demand, a recent study by ICRA pointed out.

What is even worrying is that there are no signs of improvement in the global situation in near future. The demand supply fundamentals are apparently somewhat delinked from the current international price scenario. The slowdown in production growth was in turn a result of capacity constraints, which is unlikely to improve significantly in CY2019.

"For the calendar year 2019, while deficits in the aluminium and zinc markets are likely to expand, the copper market is likely to be balanced. Consequently, the risk of a further downside in base metal prices seems low in the near term," said Jayanta Roy, Senior Vice-President and Group Head, Corporate Sector Ratings, ICRA.

In the Indian market, the impact of the shutdown of Vedanta's copper complex has resulted in a shortage of the metal in the domestic market.