Editorial


Metals to ride high on the wave of economic revival

The year 2020 is reviewed as one of those in which industrial metals have seen extremes, both on upside and downside. 

While Covid-19-led lockdowns across the globe destroyed demand in early part of 2020, a supply cut-driven rally and sharp recovery in the auto sector emerged as big winner.

Rapid improvement in sales of cars and 2-wheelers coinciding with reopening of economic activities fuelled steel industry. Fear of contracting virus led to a growing number of people shunning crowded public transport and instead using their own vehicles.

It cheered non-ferrous metals like aluminium and copper too which find significant application in the automobile industry.

Additionally, a good monsoon leading to a bumper harvest left good disposable income in rural and semi-urban areas adding to the turnaround of the domestic steel sector.

During the year gone by due to contraction in industrial activities and slow infra building, India’s demand for red metal shrank drastically. Today, imported copper meets 45-50% of India’s domestic requirements. Issues of high dependence on imports have been intensified since Vedanta’s copper smelter at Thoothukudi in Tamil Nadu was shut on May 22, 2018 for allegedly causing pollution. Now, that the economy is recovering, requirement of copper is already on a rise and if Vedanta smelter continues to remain shut, we will end up with more imports going against PM’s self-reliance goals.

Continued thrust on Atmanirbhar Bharat will see demand for aluminium once again growing strongly in building & construction, packaging and electrical sectors. Aluminium has so far only scratched surface in automotive application.

Talking about industry concerns the amount of aluminium imported by India remains a major issue today. Government is yet to find a solution that meets the demand of primary producers to raise import tariff barriers on metal and scrap and the requests of downstream units engaged in scrap recycling and making aluminium products to dispense with import duty.

Taking cognizant of the issues government initiated relief measures by introducing countervailing duty on wire rods imports from Malaysia. It also initiated an anti-dumping inquiry into imports of certain flat rolled products originating in or exported from China. Besides, like in steel, government established import monitoring cell for primary aluminium and products.

So, what this leads us to think ‘is the worst over for Indian metal industries?’ Looking at metals production chart reaching 

pre-Covid level and improvement in prices, the answer well could be ‘yes’. With support logistics back in the business, returning of migrant workers, and a gradual improvement in demand from user industries the worst could all be behind us.