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India follows global trend: lacklustre trading marks base metals market

The Bombay Metal Exchange has witnessed a dull trading of base metals in the year 1998 mainly due to lack of demand induced by slowdown in industrial activity.

Although there was a large gap between domestic production and demands, import of metals did not show any upward trend during the year in spite of falling prices of metals on the London Metal Exchange.

Importers were badly hit by high import tariff and sustained depreciation of rupee value, said leading metal traders.

The movement of metal prices, though southwards, in line with the international trend, was restricted in a modest range. Prices of copper and brass which touched a peak of Rs 13,300 and Rs 8,800 in July respectively from the opening levels of Rs 11,700 and Rs 8,325 per quintal, eased to close the year at Rs 11,200 and Rs 7,950 respectively.

While the prices of aluminium remained unchanged at Rs 6,250 per quintal at the year-end after hitting the ceiling at Rs 6,450 in July.

Nickle declined from the year's beginning level of Rs 325 to Rs 245 per kilogram towards the year-close. Prices of lead and tin also moved down from their respective opening levels of Rs 3,950 and Rs 32,700 per quintal to Rs 3,850 and Rs 36,500 per quintal.

Traders said that the domestic prices did not decline to the extent of the fall on the LME mainly because of high import duty and lower offtake from downstream domestic user industries like extrisions, electrical and transport sectors.

While the copper prices fluctuated mostly in keeping with the international trend due to sizeable import of the product into the country, prices of aluminium were stable due to better availability of products from local producers.

Hindalco and Nalco's production cost of aluminium are the lowest in the world at around $ 1,000 a tonne. This helped the Indian companies to avoid incurring operating losses at the current London Metal Exchange prices. Globally, prices of aluminium are expected to fall further in the near future.

On copper, industry sources said that the demand would grow at an annual rate of about 7.5 per cent notwithstanding the fact that the prices of copper receded substantially during the year because of recession in many consuming nations including Asian majors.

Globally, total capacity of copper production is seen rising to 18,548 million tonnes by the year 2002. This is 170,000 tonnes higher than a previous forecast, thanks to the expansion of production by Aditya Birla group in India.

Another commodity whose demand was severely affected by the Asian markets crisis during the year was steel. Its price crashed by over 60 per cent globally. The situation turned so bleak that many exporting countries had resorted to dumping, forcing affected nations to introduce anti-dumping measures.

While the mood in the Bombay Metal Exchange was no different from that prevailing in other commodity markets, traders are expecting a rise in stocks and a further drop in prices at the LME. This sentiment held them back from making large deals before the year-closing.

UNI

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