India’s industrial production, which recovered in September after six months of contraction, declined again in November. The index (IIP) fell 1.9 percent in November (year on year), according to data released on Tuesday.
The strong contraction was seen in the IIP’s two sub-indices – the computer, electronic and optical products index, which fell 15.4 percent, and the machinery and equipment index, which fell 5.4 percent.
Growth in base metal production slowed to 1.2 percent in November, after registering 8.1 percent growth in October. In manufactured metal products, growth slowed to 2.1 percent, down from 14.8 percent in the previous month. In electrical equipment, production recorded a steady growth of 0.1 percent in November, clearly below the dramatic jump of 20.4 percent in October and 11.9 percent in September. Also in motor vehicles, growth was disappointing at 0.9 percent in November, compared to 18.5 percent in October.
Sandeep Jain, managing director of Laurel Wires and senior vice president of Bombay Metal Exchange, spoke about the slowdown in demand: “There has been a slowdown in orders in the past two months, especially from manufacturers of transformers and electrical components. Liquidity stress has increased for companies, as metal prices have been rising steadily … ”Metal prices, including copper, aluminum and zinc, have increased significantly over the past nine months.
Supply disruptions due to Covid-related mining disruptions and strong demand from China due to increased infrastructure spending have spiked metal prices. Between March and October, copper prices rose 54 percent and at current market prices ($ 8,008 / t) are 83 percent above the March price ($ 4,371 / t). Zinc prices rose 50% in October and are now about 65% higher than the March low of $ 2,523 / t. Similarly, nickel, lead and aluminum prices have also skyrocketed.
Harssha Shetty, Director of Marketing, International Business, Vedanta Group, said: “November saw a drop in demand, while there was a recovery in December. November, being a festive season, saw less activity. In addition, aluminum, copper and steel prices rose. Since most project orders are ordered at fixed prices, market participants were slow to absorb the price increase in November and order executions were minimal. “
Shetty added: “The fourth quarter should be good and is usually the best quarter for metal demand and this fourth quarter may be better than the fourth quarter of fiscal 20’s. In some segments – Transmission and Distribution, domestic demand it has not returned to pre-covered levels and the industry is taking advantage of the export market to maintain healthy capacity utilization ”.