How Are Rising Metal Prices Affecting The Indian Economy
The front page of the Mint newspaper on the 12th of May, carried an interesting article about how rising metal prices would affect the Indian economy.
As you can see from the chart above from the article, Copper prices have risen up an astounding 34% on the London Metal Exchange. Hot rolled coil (HRC) prices in China have also increased by 44% this year, which could lead to inflation of prices in the global markets. Right now, countries are spending 4 Trillion Dollars globally on metals, and this figure will see a much bigger increase.
We feel that as Government spending on Infrastructure projects is huge (approximately 4 Bn. USD), this will give impetus on rural demand & will keep the steel prices on the higher side.
Further, China has slashed the export rebate of 13% for their own manufacturers which will only serve to increase their imports. India has emerged as one of the prime steel suppliers to China post-COVID times.
This is an opportunity for Indian steel mills to better realisation through exports, which again will help to keep the steel prices on a higher side.
This will definitely increase commodity inflation for other sectors like auto manufacturing, the steel producing companies, however, will certainly reap the benefits of these high prices in this bull run.