Covid hits metal demand, prices: ICRA

KOLKATA: Demand for several metals will contract this year, ranging from 3%-4% for copper and zinc, and up to 8% for aluminium because of the pandemic, rating agency ICRA said.

As a result, prices fell to a four-year low in April and recovered somewhat after that, it said.

Prices initially fell up to 10% in January after the outbreak of Covid-19 in China, which was followed by steady prices in the following month and by 15%-20% in March and April as the disease spread, it said.

Prices have recovered by 10%, 13% and 27% for aluminium, zinc and copper respectively in the last two months, the agency said.

The pandemic has also disrupted mining activity, which has supported prices now, said Jayanta Roy, head of corporate sector ratings at ICRA.

Prevailing metal prices may also have received a support from financial deals on the metals, it said. “Such deals have turned lucrative under the current market dynamics, on the back of abundant liquidity in global markets,” it said.

Globally construction and transportation sectors are major demand drivers of the three non-ferrous metals, and these sectors are strongly correlated with the health of the underlying economies, it said.

For India, the depreciated rupee has strengthened domestic copper prices by over 7% as on date compared to levels prevailing a year ago; but custom copper smelters would be impacted by a correction in copper treatment and refining charges by 29% in the last three months, it said.