Apr 12, 2001|
Non ferrous metals: Challenging environment...
In the current quarter ended March 31, the performance of non-ferrous pivotals have been quiet varied. Sterlite has declined by 39% while Hindalco has risen by 4% over this period. Hindalco's peformance is impressive considering that the markets have declined by 14%.
In the first quarter of calendar year 2001, base metal prices have weakened. Copper prices are down 6.6% during this period while aluminium prices have fallen by 6.2%. The decline in prices has been more towards the latter half of this period, as confirmation is received about a U.S slowdown. Base metal prices are expected to weaken further, going into the second quarter, as U.S grapples with a possible recession and growth in Japan expected to be in the negative. These countries are the two largest economies in the world and the slowdown will impact the demand-supply dynamics. Being a commodity business such movements will be reflected in the prices of the base metals.
The weakening of the U.S and Japanese economies and a possible global slowdown justifies the apprehension of the markets regarding the demand for base metals, consequently impacting prices. Nevertheless, the demand-supply balance for these metals is estimated to be favourable and prices are not expected to touch their lows of March '99. Copper and aluminium had dropped to $ 1,300 / tonne and $ 1,150 / tonne at that time. Currently, copper and aluminium trade at $ 1,685 / tonne and $ 1,510 / tonne respectively.
The fortunes of base metal majors have diminished, as prices of these non-ferrous metals have declined and are expected to weaken in the coming quarter. The U.S economy is expected to demonstrate a turnaround only in the second half of the year, which could result in an upturn for these commodities as well.
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