Business has taken a back seat with politics at the forefront. The whole country is gripped by election fever as seven phases of polling are under way across India, the last of which is scheduled for May 19. Results are due out on May 23, which should bring the curtain down on the biggest event in the country as it connects 900 million eligible voters.
Whoever forms the government may not have an easy task once they assume office as India is juggling with several issues related to new job creation, tight liquidity and a slowdown in consumption, as well as fulfilling the big promises made to the people during the election campaign. Problems could intensify if there is no de-escalation of the global trade war and India gets caught in the crossfire. Only time will unfold these events but, all in all, there are some tough days ahead.
On the business front, there has been tremendous pressure on account of recent losses on the LME. Already reeling from weak demand, processors/smelters are fighting hard to maintain margins and market share. Owing to the import controls in China, there are already additional copper units being shipped to India in the form of mixed motors, cable, Talk, etc. Despite the LME registering new highs, prices of zinc have nosedived on account of the excess units coming in mixed metals and also weaker demand.
Automotive sales have skidded and the drop in demand is up to 20%. The current conversion between scrap to die-casting grade ingots is dismally low. Further changes in the auto sector are expected as all manufacturers must comply by April 2020 with “Bharat VI” - the new norms regarding emission controls, which are equivalent to Euro VI. One of the many moves aimed at combatting rising pollution, these new norms would require a major overhaul of technology as engines would need to be redesigned, adding costs for manufacturers and customers alike.
Metco Marketing (IND) PVT Ltd, Senior Vice-President of the BIR Non-Ferrous Metals Division