India

The fading effects of COVID-era fiscal spending have been pulling down industrial demand in the West while China has continued to struggle amid slowing exports and poor end-demand for houses. For its part, India’s industrial outlook has remained a bright spot on the global map, with output jumping 5.7% in July following gains of 4.2%, 5.3% and 3.7% in April, May and June, respectively. Moreover, growth in the country’s core industries - a barometer of its infrastructure growth - rose to 12.1%, a 14-month high. India’s bank borrowings climbed 20% year on year, the highest in a decade.

India is witnessing a capital expenditure boom. Although the foundations for this have been laid by the government’s accelerated spending over the last few quarters, the private capex cycle is lifting too. The Indian budget allocated US$ 122 billion to infrastructure investments, up 33% from last year and nearly three times that of 2019. After drought-like conditions in August, the Indian monsoon recovered in September to diminish fears of slowing rural demand.

Global headwinds, however, continue to pose challenges. The US Federal Reserve’s indication of one more rate hike this year has strengthened the dollar, thus reducing liquidity in the global monetary system. India’s foreign exchange reserves of US$ 591 billion are down from US$ 609 billion three months back. Foreign investors withdrew US$ 1.6 billion from Indian capital markets in September for the largest amount of selling in seven months.

According to the International Copper Association, India’s demand for the metal grew more than 27.5% in the 2022 fiscal year when compared to 2021 on the back of robust growth in the country’s power, infrastructure, real estate, consumer durables and industrial sectors. India’s copper consumption is likely to triple by 2030, driven by growth in electric vehicles and other environmentally-friendly applications.

Some countries’ restrictions on trade in copper scrap will encourage India’s domestic industries to invest in the secondary market while also creating new recycling hubs. To attract more copper resources, the Indian government cut import duties on copper scrap by half in February 2021 - to 2.5% from 5% - and is maintaining this tariff level for the 2022-23 fiscal year.

India remains an attractive market for lead, with anticipated average growth of 6.4% up to 2031 to be driven by the automotive and inverter battery markets. Major battery manufacturers are continuing to grow their capacities to meet automotive and industrial battery demand. However, the latest July-September quarter was slow owing to the rainy season and low export demand from Europe. Demand should pick up in this year’s October-December period owing to festival demand for cars.

India’s exports of aluminium alloy ingots have also been slow owing to low demand from overseas markets. However, domestic automotive sales were up in the last quarter and domestic demand is expected to remain stable over the next three months.

After a slowdown in July, FRP aluminium demand showed signs of recovery in August. Indian demand for consumer durables and thus for FRP aluminium was set to pick up momentum in September owing to the approaching festive season.