ICRA Upgrades Non-Ferrous Metal Outlook to Positive

ICRA revised its outlook for the domestic primary non-ferrous metal industry to positive from stable, citing stronger pricing conditions, healthy domestic demand, and improved earnings visibility.

Key Sector Drivers and Projections

Global supply disruptions and low inventories pushed non-ferrous metal prices up by 30-40% in the first five months of FY27. Operating margins could rise by around 400 bps to around 35% if this favourable pricing environment persists.

Market Balances and Supply Constraints

Global demand growth remains subdued, but supply-side constraints will support market balances. Aluminium is projected to remain in a deficit of around 1 million metric tonne due to supply disruptions in West Asia.

Refined copper is tightening as inventories move to COMEX warehouses amid uncertainty over US tariffs. Refined zinc supply remains constrained by weaker mine production and declining ore grades, with global mine output contracting by around 0.5% in 5 months of CY2026.

Domestic Demand and Production Outlook

Domestic demand for base metals including aluminium, copper, and zinc is expected to grow by 8-9% in 2026-27. Domestic production of aluminium and zinc continues to exceed consumption, leading to large export volumes with low off-take risks. Lower copper production created a large deficit in the domestic market, resulting in large imports that are unlikely to improve in the near term.