The domestic industrial demand for metal scrap is expected to fall over 30 per cent from June as India is likely to feel the heat of the global recession only in the second half of 2009, Rasik Kothari, president, Bombay Non-Ferrous Metals and Scrap Merchants' Association, said.
“Domestic scrap demand has fallen nearly 30 per cent already since the end of 2008 and is likely to deepen further from June,” Kothari said.
Most metal companies are already incurring huge loses as financial slowdown has hampered local scrap demand, Kothari added.
Bombay Non-Ferrous Metals and Scrap Merchants' Association promotes non-ferrous metals' trade and industries. Sharp fall in demand for consumer goods anticipated June onwards is likely to hit domestic scarp metal consumption, Kothari said.
“Consumer spending may remain minimal in the latter half of 2009 as recession is seen gripping the country. This will restrict consumers to spend only on absolute necessities, due to which demand for electronic items may fall drastically,” Kothari added.
Kothari is optimistic demand for non-ferrous metals will pick up from April 2010, driven by demand from infrastructure and housing sectors.
In the Interim Budget, the government said it will step up investment in infrastructure and rural economy to fuel domestic demand and supply, and rein in the current economic slowdown.
Also, the recently announced stimulus packages have provision for higher spending in core sectors like highways, ports, and national rural employment guarantee scheme.
Kothari said that the new government's focus on infrastructure and housing revival will push up metal demand.
India will go to polls during April-May.
Kothari sees global copper prices steady until December, before rising to $5,000-a-tonne level by April 2010, when demand is expected to pick up from India and China.
“India and China will be the main demand drivers for copper as these are expected to be the only two growing economies amid the turmoil,” Kothari said.
Also, production cuts by most global mining majors is expected to push up copper prices as existing inventories would be exhausted by April 2010, he said.
“There will be no looking back for copper prices from April as production from mines cannot resume in a short span,” Kothari said.
“Currently, scrap metal import is only 20-30 per cent due to lower metal demand. India's imports are likely remain at this level until December,” Kothari said.
India imports scrap of copper, brass, aluminium, zinc, lead, and German silver( nickel-silver), mainly from US and UK, and also from Dubai, Australia, and New Zealand.
Source : Business Standard