Prices of aluminium, copper and zinc unlikely to rise further: ICRA

The Dollar Business Bureau 

The prices of base metals including aluminium, zinc and copper are unlikely to rise further due to higher production which results in excess markets in 2016, according to a report. 

The prices of base metal had gradually strengthened earlier in the initial nine months of this year as a result of the shortfalls in the demand-supply balances of the base metals globally, except some positive sentiments on overall demand scenario in China, said credit rating agency ICRA in a report. 

“During the said period, the prices of zinc, aluminium and copper have increased by 53%, 13%, and 4% respectively,” it added. 

Among the given three base metals, the deficit in the market of zinc has been the broadest, therefore the prices of zinc had witnessed the steepest upturn during this period, the report said. 

“While zinc and aluminium markets continue to be in deficits, the global copper market has turned into surplus in the mid of 3rd quarter of 2016,” it added. 

“Higher output, when international consumption growth continues to be subdued, would possibly result in surplus copper and aluminium markets and put pressure on these metal prices,” the report said. 

ICRA's outlook on India’s long-term demand for the base metals remains positive, led by investments in infrastructure development projects for the distribution and power transmission sector, urban housing segment and smart city programmes. 

Jayanta Roy, Senior Vice-President and Group Head, Corporate Sector Ratings, ICRA, said, “The industry's fundamentals, which could have justified this upturn in prices, have not experienced any significant change during this period. Nevertheless, improving manufacturing PMIs of the major economies is a positive for global base metal demand, going forward.” 

ICRA said that the global base metal prices are not likely to rise further, as latest rallies have been mainly driven by sentiment, and positions occupied by international commodity funds, without any important change in the fundamental demand-supply positions in the past months.