ICRA has projected a robust domestic demand growth rate of 9% for non-ferrous metals in the next two financial years. Despite this positive outlook, the ratings agency also highlighted the challenges faced by the industry, including pressure on profit margins due to a weak global environment.

According to ICRA, the domestic demand growth rate is anticipated to stay strong at 9% over the next two fiscal years, surpassing the expected global demand growth rate. Consequently, the agency has maintained a stable outlook for the sector. Jayanta Roy, Senior Vice-President and Group Head of Corporate Sector Ratings at ICRA, pointed out that global consumption of non-ferrous metals slowed down in the current year due to sluggish demand in developed nations.

Although there has been a partial recovery in demand from China compared to the previous year, uncertainties persist regarding the strength of China's recovery. Additionally, there are indications of increased supply, particularly from China, leading to a surplus metal balance for the ongoing year. As a result, metal prices are unlikely to see significant improvement in the near term, and the industry's profit margins will continue to be under pressure in the weak global environment.

Roy stated, "We anticipate the operating profitability of domestic players to be at 17% in FY2024 and FY2025, representing a contraction of nearly 150 basis points compared to the levels in FY2023."

Source: Business Standard