The prices
of base metals lost their shine over the past year as supplies recovered after
earlier disruptions and rising input costs and increased availability of raw
materials also played their part.
calendar year 2023, industry experts opine,
due to supply issues and low inventory position. (IE)
The prices of base metals
lost their shine over the past year as supplies recovered after earlier
disruptions and rising input costs and increased availability of raw materials
also played their part. The supply of global base metals will remain tight in
calendar year 2023, industry experts opine, due to supply issues and low
inventory position.
In the past one year, the
prices of most base metals – including aluminium, copper, nickel, iron ore and
hot rolled coil (HRC) steel – were trading lower by up to 40.3% on the London
Metal Exchange (LME), Commodity & Energy Exchange (CMX) and Multi Commodity
Exchange of India (MCX).
“Steel and major
non-ferrous metals (aluminium, copper and zinc) have seen declining prices.
Rise in coking coal and iron ore prices due to supply chain disruptions had led
to steel price increases in the first quarter of calendar year 2023. However,
as major raw material producing regions are out of their cyclone season, ample
availability of material has led to decline of input prices,” Hetal Gandhi,
director-research at Crisil Market Intelligence and Analytics
told FE.
“This coupled with demand
slump from China along with decline in April PMI by 5% sequentially, has led to
global steel prices softening. Similarly, domestic steel prices are under
pressure with limited trading activity as buyers anticipate further price
correction,” Gandhi added.
According to ICRA, global prices of base metals contracted
by a steep 18-28% in FY23, compared with the record highs in March 2022, amid
considerable volatility. Although the fiscal commenced on a healthy note, the
metal prices witnessed significant headwinds in Q2 and Q3 of FY23 given an
uncertain global economic outlook and demand slowdown in China.
With China reopening, some
positive sentiments built up in January this year, when metal prices touched
almost their six-month high. However, the rally was short-lived as metal prices
plummeted again in February and March 2023, owing to uncertainty over the
strength of China’s
recovery and continued weak global sentiments, it added.