The Indian economy appears to be slowly resurrecting itself from the troughs experienced in April when the lockdowns were at their most severe. Despite a relatively low mortality rate and higher recovery percentage, new infections are steadily increasing - to the great concern of the government and the public. Individual states are now making independent calls relating to enforcement and the intensity of lockdowns. This has made the situation precarious as many businesses are in reboot mode but remain at risk of being halted or restricted if stricter lockdowns are imposed. What seems certain is that, in dealing with this pandemic, India is going to be in it for the long haul.
Now for the good news: businesses have started ticking over. After a zero sales month in April and a marginal recovery in May, June saw passenger vehicle sales at around 50% of last year’s level. The festival season kicks off in September and automotive companies are expecting to recover more of the lost ground. With the agricultural sector performing better this year, rural consumer purchasing is thought likely to outdo urban buying. The government will also look to fast-track some of the big infrastructure projects in a bid to boost employment and consumption. So there are some green shoots to be seen.
As regards the recycling industry, most of the scrap-carrying containers stuck at ports have now been cleared. Despite the government’s instructions, the ports, container freight stations and inland container depots did not agree to waivers for the lockdown period, and coerced importers into paying their charges. Shipping lines were a little more considerate and gave waivers for specific periods while still leaving importers saddled with huge losses. With help from the Material Recycling Association of India, the whole issue is now sub judice and the courts will decide if importers stand any chance of securing refunds.
Most secondary smelters of aluminium and copper, including brass foundries, found solace in exports of intermediate products as local demand had become numbed. With some traction in July and expectations of a further improvement in domestic consumer demand over the coming months, the focus should be on getting local supply loops active and regularized.
Ironically, and despite all the global chaos and sluggishness, terminal markets are all fired up, and trading levels are even higher than in the pre-COVID period. It is even more imperative that our risk management and trading decision-making remain at their sharpest.
Metco Marketing (IND) PVT Ltd, Senior Vice-President of the BIR Non-Ferrous Metals Division