25 FEBRUARY 2016AlCircle.com
Downward pressure on Indian aluminium prices to continue: CRISIL
Edited by : AL CIRCLE
1 min read
Non-ferrous metal prices plummeted in 2015 due to global slowdown and massive overcapacity, especially in China. Tailing these global trends, aluminium prices in India are estimated to decline by 15-17 per cent in the current fiscal.
Consequently, the operating margin of aluminium sector is expected to tumble by 1,000-1,200 basis points (bps). In the wake of deteriorating profitability and rising imports, the government imposed a minimum import price (MIP) on 173 steel products on February 5, 2016, for six months. This levy comes as a breather for the ailing industry, as it is expected to curb imports and also marginally improve pricing flexibility of producers in the short term.
No MIP/similar measures have been announced to help the Indian aluminium industry. Hence, it is expected domestic aluminium prices will continue their southward sojourn and decline further by 3-5 per cent next fiscal. Moreover, with use of high-cost captive coal, the profitability of domestic aluminium players will deteriorate and some may even incur cash loss.
Consequently, the operating margin of aluminium sector is expected to tumble by 1,000-1,200 basis points (bps). In the wake of deteriorating profitability and rising imports, the government imposed a minimum import price (MIP) on 173 steel products on February 5, 2016, for six months. This levy comes as a breather for the ailing industry, as it is expected to curb imports and also marginally improve pricing flexibility of producers in the short term.
No MIP/similar measures have been announced to help the Indian aluminium industry. Hence, it is expected domestic aluminium prices will continue their southward sojourn and decline further by 3-5 per cent next fiscal. Moreover, with use of high-cost captive coal, the profitability of domestic aluminium players will deteriorate and some may even incur cash loss.
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