India being one of world’s largest producers & consumers of most metals. Base Metals may outperform post H2, second half is turning positive. Demand from china have slowly started rising. The GDP in China have shown significant turnaround. Prices have seen gradual rise since July 2020. However, demand in Zinc, Nickel & Lead are still slow but demand in Copper, Aluminum, Steel are encouraging.
The ongoing recovery in economic activities is seen supporting industrial metals consumption. Stimulus packages around the globe would see base metal shinning in near term. Positive macroeconomics, liquidity surplus, and surge in demand makes metal sector buoyant.
Inflation ticking up so are the prices in metals, Prices in base metals are at multi- months high. Major players are expanding their capacities buy small or big acquisition, debottlenecking and smoother process alignment.
Through several cycles it is witnessed when the rest of the world slows, China tends to be a buyer of these commodities, and this time it’s no different. As of now, it appears that China is in the midst of a V-shaped recovery, and it’s stimulating its economy with infrastructure spending that’s positive for base metals in bulk, and is helping hold commodity prices up.
Electric Vehicles to be future of the Automobile Industry, copper & steel would play important role in this sector, Grids would require copper & Iron steel extensively. Auto Scrap Policy would add fuel to demand going further.
Road Ahead
Second wave of Covid19 may impact the demand curve, Overall cycle to remain stable and would yield returns for manufacturing units.
Growth rate at 4 to 5 %, but price rise should add to the margins going forward
BENEFICIARIES : TATA STEEL, VEDANTA, HINDALCO, JINDAL STEEL, SAIL.
