Weak Currency to Make Imports Costlier for Metal Firms

SEATTLE (Scrap Monster): According to CRISIL Research, weak rupee is likely to make imports of input materials more expensive for metal firms. At the same time, it expects that exports are likely to get a push.

The decline in the value of rupee will have multiple impacts on steel industry. The imports of raw materials may become more expensive, while exports may flourish. The steel imports will become less competitive, which in turn will act as a buffer to weakening domestic steel prices. It must be noted that the country has imported close to INR 1 trillion worth of coking coal- the key steelmaking raw material during fiscal 2022 alone.

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The dip in global prices of base metals since April 2022 is feared to hit the margins of domestic producers. On the positive side, it will allow user industries, including automobile and white goods manufacturing industries, to pass on the gains to consumers. The fall of rupee against the greenback could lead to elevated import costs, which in turn will help domestic metal firms to retain their pricing power.

During the period from end-March to mid-May this year, LME aluminum prices have dipped by almost 21%. The copper and zinc prices have fallen by 10% and 13% respectively. Also, hot-rolled coil (HRC) prices are down by nearly 11%.