When the going gets tough, the tough get going. If you go through the August sales of consumer goods in India, it would appear that Billy Ocean sang that song specially for us.
The white goods industry had its best August in five years, registering growth of between 25 and 40% in the different segments. Similarly, automotive sales showed a strong resurgence, with the country’s top two car makers posting around 20% growth compared to their August 2019 sales. It was the same for two-wheelers, which posted around 5% average growth. October and November are festive months in India - and demand is expected to be better. The stock market is almost back to its pre-COVID levels while the Indian rupee has rallied against the US dollar of late. Demand from rural and semi-urban pockets is scaling new heights.
All this is happening alongside approximately 86,000 new cases of COVID every day. With a recovery rate of over 82% and a fatality rate of 1.7% (one of the lowest globally), India has re-booted and now wants to go full throttle in recovering from the economic losses of lockdowns. The extent of the damage in the April-June quarter was so intense that the year will still end with a contraction of 8-10%. But once factored in, the bounce-back could be equally sharp. With a committed expenditure of over US$ 180 billion over the next seven years in major infrastructure projects such as housing, transport, defence and power generation, this should create an internal impetus to propel growth. Adding to this the aspirational value of young Indians (65% of the population is under 35 and the average age is 28) with rising income levels, consumer demand will also grow.
All of this augurs well for the secondary metals sector. With a large number of labourers returning from their villages, scrap processors and smelters are becoming busier. Average output is estimated to be 70-80% of usual capacities, and it is likely to improve further in the coming months. The government is expected to announce a vehicle scrappage policy before December, which will be transformational in terms of future automotive demand, as well as raw material (scrap) supplies.
India cannot completely insulate itself from major, unanticipated global events like pandemics or trade wars, but there is a need to be realistically optimistic and to allow for capitalization on the opportunities presented.
Metco Marketing (IND) PVT Ltd, Senior Vice-President of the BIR Non-Ferrous Metals Division