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India continues to outperform the world as China’s recovery fizzles and the industrial slowdown accelerates in the West. Driven by robust domestic consumption and a strong pipeline of public and private capital expenditure, India’s manufacturing PMI for June registered its 24th consecutive month of expansion as compared to 10 consecutive months of contraction in the global PMI. India’s industrial output accelerated in May to 5.2% year on year. Goods and Service Tax collections continue to rise by two-digit percentages, data show.

India’s Prime Minister Narendra Modi emphasized the importance of infrastructure development as a crucial factor for driving the country’s economy and urged ministries to speed up infra spending leading up to the 2024 general elections.

India attracted total foreign direct investment of US$ 70.97 billion in the 2023 financial year, down from US$ 84.83 billion in 2022. Despite the decline, India remains a positive force in the global economy, with key factors in its growth including a sizeable labour market, supportive policies and a growing digital economy.

India, however, could face problems in the form of rising food inflation and drying dollar supplies owing to monetary tightening by the US Federal Reserve. Nevertheless, with its strong undercurrent, India continues to show promise to the rest of the world.

Among the various metals markets, domestic copper scrap prices have been trading above those for imported material in the last month. Although export demand for recycled copper ingot remains unexciting, domestic demand is quite decent.

Demand for lead weakened from mid-May as the early arrival of the monsoon in the north of India cut short demand from the inverter segment. Also, demand slowed from the automotive sector, partly as a result of lower output from a leading battery producer following a fire. However, demand is expected to recover in the current quarter.

Prices of zinc scrap have not fallen in line with the LME, thus making use of refined zinc a better alternative for production of zinc oxide.

Sales of aluminium alloy ingots have been low for the last two months, with projected demand also poor owing to a reduced output of four-wheelers, created by a shortage of semiconductor chips and slowing export demand. Demand for flat-rolled aluminium remains strong and the sector is seeing new capacity build-up, including from new entrants.

Meanwhile, the aluminium extrusion market has experienced a 30-40% downturn since March, thus materially affecting producers’ cash flows.

Anirudha Agrawal

Manaksia Aluminium CO LTD. (IND), Guest contributor


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