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EditorialWill reopening of China affect India’s metal companies?

Will reopening of China affect India’s metal companies?


The country's data has not yet been released since China clubs January-February data together due to the New Year holiday period.

As a result, industrial metal prices have been volatile.

steel manufacturers who were suffering from low demand, have started to hike prices.

Raw material costs have also soared.

This could start to impact margins for Indian steel producers from the first quarter of the 2023-24 financial year (Q1FY24) although margins should not be affected much during Q4 FY23.

High raw material prices will be a major concern for Indian steel producers through the first half of FY24.

In the last month, coal prices have risen by 15-20 per cent. If domestic demand remains robust due to the infrastructure thrust of the 2023-24 and due to the general uptick in macroeconomic activity, Indian metals producers may be able to hike prices and maintain margins.

Overall sentiments and guidance from the sector are positive but steel producers have flagged higher raw material prices as a concern and demand is yet to pick up in the rural sector.

Managements expect lower demand from two-wheeler manufacturers, due to weak sales, to be offset by strong demand from the construction sector.

Industrial metals prices spiked at the onset of the Ukraine War, which caused fears of global supply disruption since both nations are major producers.

Since then, slow global demand has led to corrections but prices generally started to bottom out and pick up again in the later part of the 2022 calendar year (CY).

Tata Steel which has strong market share in Europe through Corus, has projected weak quarters for Europe operations. The Turkey earthquake may, however, lead to a surge in demand as reconstruction kicks off and it has caused supply chain stress since Turkey used to have exports of about 6 million tonnes of steel.

Meanwhile, aluminium appears to have bottomed out, and global inventories are extremely low, going by historical comparison.

This should mean a bounce in prices as China reopening stabilises. Copper has seen a steady uptrend since Oct 22, though this has been a gradual rise rather than a sharp spike in prices.

The Northlines is an independent source on the Web for news, facts and figures relating to Jammu, Kashmir and Ladakh and its neighbourhood.


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