Indian demand for non-ferrous metals expected to grow at 8 per cent between 2016 and 2021: KPMG

MUMBAI: Indian demand for non-ferrous metals is expected to grow at 8 per cent between 2016 and 2021, in line with strong economic prospects and thrust on manufacturing sectors but stronger government support is required to motivate the industry, a report by KPMG said.

Non-ferrous metals include metals like aluminium, copper, zinc and lead that find application in many industrial and infrastructural uses like real estate, automotive, defence, rail, power etc.

According to the report, the performance of the non-ferrous metals industry in India has “far outpaced” the global trend owing to its huge raw material reserves, wide demand base and relatively low cost of production.

That said, downstream products like copper wire and aluminium foils are still dominated by imports as the downstream industry is relatively undeveloped in India.

The report also added that the country has registered a strong growth in recycling of metals for use. “India has seen a strong growth in the recycling industry. Over time the share of recycled metals has increased considerably and is now almost equivalent to the global level,” the report said. However it conceded that legislatory intervention is required to contain the level of scrap imports that still dominate the sphere.

How has China influenced the global demand, pricing and profitability of non-ferrous metals
The demand for non-ferrous metals grew at a steady pace with a CAGR of 2.8 per cent during 2013 to 2016 in line with global GDP growth of 3.4 per cent during the same period.

China, with its sheer population as well as advancement of manufacturing, is the largest consumer of non-ferrous metals and majorly influences the dynamics of the industry. The recent slowdown in China has significantly impacted the global industry in terms of demand and supply, trade, prices and profitability.

The country accounts for 52 per cent of the global aluminium consumption. In Asia, consumption showed a declining trend in Japan but was compensated by a higher demand from India and the middle east . North America has also firmed up since the global financial crisis. Prices recovered because of supply cuts in China and healthy demand growth.

In the case of copper, world refined consumption grew at a CAGR of 3 per cent from 2012 to 2016 driven mainly by increasing consumption in China.

Consumption of zinc, which is the fourth most widely used metal in the world also grew at a CAGR of 3 per cent during 2012 to 2016. China which contributes to 47 per cent of the global zinc consumption, along with India, lent to the majority of the demand due to the respective governments’ efforts to boost investment in real estate and infrastructure.

In addition, the report added, “subsequent pick up in manufacturing activity in China helped in a healthy growth in galvanised steel production , the single largest consumer sector of zinc.”