Metal Prices Shine Brighter, Rising Input Costs Emerge As The Biggest Hurdle: Report

Metal prices surged in August, indicating a strengthening sector, yet rising input costs may pose a threat to the recovery's longevity, according to a Centrum report. Price momentum advanced despite fluctuating demand, highlighting the significance of raw material costs in the forthcoming months. Steel prices experienced a resurgence, with global hot-rolled coil (HRC) prices rising by approximately 3% month-on-month in the US and Europe, and remaining largely stable in China.

In India, rebar prices surged nearly 10% month-on-month and 12% year-on-year, following a steep decline in the preceding three months. The recovery in domestic HRC prices is attributed to planned maintenance shutdowns at integrated steel plants, reduced supplies, dwindling inventories, suspension of fresh bookings, and robust demand.

Centrum linked the rebar recovery to these factors, as well as controlled dispatches, limited availability, and heightened Middle East demand. However, steelmaking raw material prices displayed contrasting trends in August. Australian iron ore prices dipped around 2% month-on-month and 3% year-on-year, while NMDC announced its second consecutive price reduction in August.

Crisil highlighted the potential impact of rising oil and metal prices on inflation, as global crude steel production decreased by roughly 4% month-on-month to 149.2 million tonnes in July, although it remained relatively stable annually. China's production fell by around 4% year-on-year, whereas output outside China increased by 3%.

India demonstrated relative resilience, with crude steel production surging 3% year-on-year and 2% month-on-month to 14.4 million tonnes. Among non-ferrous metals, aluminium prices rose by about 3% month-on-month to $3,251 per tonne in August, while zinc and copper gained approximately 8% and 6%, respectively; lead and nickel advanced by around 1% each.