It is said that as the GDP of any society grows, its consumption of non ferrous metals also starts increasing. In India, we are witnessing this transition for the last two decades, or more specifically from 1993 when India adopted liberal model of the economy and facilitated globalization.
Aluminium and copper are rightly called as ‘Metals of 21stCentury’. As we can see, the downstream processes like rolling, casting, extrusion, forging can produce different components / products from the primary metal and serve a variety of applications in the industry or otherwise.
Today, unfortunately industry is projected as some sort of enemy of environment and common man by the media for the reasons best known to them. It is said to be damaging the environment including the land water and air. There are so called environmentalists, NGOs shouting how ‘industry’ is bad for the society. The common man too believes these allegations as they are hammered hard and repeatedly and secondly, there is no industry forum supporting the industry’s cause and bringing the actual facts on the table. Today, every factory has to follow very strict environmental regulations and they are being monitored and checked on a regular basis. I know many companies which actually improve the environment. Their manufacturing units are in fact greener than outside land. They plant trees, improve water table, employ the latest technology to prevent emission of hazardous gases. Mind well, this is apart from the regular CSR activities being carried out. Needless to mention about their tremendous contribution to national economy by creating jobs and helping to improve the GDP.
Its time now to tell our society loud and clear that we industry professionals do understand the importance of environment and try our best to protect and nurture it. At the same time, we have the responsibility to provide livelihood to our society and we try to achieve this by doing minimum or no harm to the environment.
Indian economy has witnessed two tremors in the last one or two years. One was demonetization and the other was introduction of GST, Goods & Services Tax. While demonetization was intended to nullify the fake currency and to curb cash economy, GST’s purpose was to bring the whole nation under one tax regime, avoid double taxation and collect the tax at the point of sale. The thought behind these two moves was said to be making Indian economy more straight and more attractive for overseas investment. While one can debate the extent of fulfillment of these objectives, it is really creditable on the part of Indian economy which successfully withstood these tremors. Its growth rate for the fiscal 2017-18 was around 6.5 % and it is predicted by the international agencies that Indian economy will grow by around 7.5 % in the fiscal 2018-19.
We all know that the metals consumption is directly related to GDP growth rate and thus the consumption grew decently in 2017-18. Now if Indian economy speeds up in coming months, the consumption curve is also going to shoot. Infrastructure and construction are the two foremost important consumers of non ferrous metals and they seem to be doing well. Another important customer is auto industry. It is undoubtedly doing well for the past few quarters. As we all know, the fortune of foundry sector is strongly linked with that of auto sector. All these factors do make us believe that Indian metals industry will be doing better, quarter after quarter. The raider in this thinking is that the consumption is sure to grow. If Indian producers are unable to take advantage of this situation for their own (financial or management related) reasons, then the country may turn into a long term importer.
Here, we should differentiate between the large integrated metal business houses and medium scale processing plants. The financial and ownership restructuring problems are faced by these large business houses while the medium scale plants are in a perfect position to exploit this situation. I am personally quite bullish on Indian economy and today it is the only one in the world where one can bait his money !
Generally, the Indian metals industry seems to be going well.
Due to increase in infrastructure projects, the demand for non-ferrous metals is increasing steadily. A lot of new applications for the industry sectors like extrusion, copper are being developed which are sure to give support to the demand curve. The most important factor is auto industry. Huge amount of castings go into a vehicle and to say so, foundry sector growth is largely associated with the performance of auto industry. Now auto sector fortune depends on sale which is influenced by road condition, bank interest rate as well as growth of economy in general. Considering all these factors, auto sector seems to be doing well these days and foundries can surely look forward to a bright future.
Although the metals industry is doing well, this does not mean that it is free of problems and issues. The first and foremost is lack of technological upgradation. Barring few top companies, most of the processing companies (like extrusion, drawing, casting etc.) still use outdated technologies and processes. If one wants to compete in global marketplace, the products have to be made using latest technologies and processes. A substandard product has no place at international level.
The second important problem is the lack of technical manpower. This is a real irony as on one hand we say that India has huge unemployment and on the other hand, we complain of not getting technical manpower to run metallurgical factories. This simply means that we should have more sector specific and specialized courses producing executives and technical people specifically trained to perform in that particular sector. Associations and other trade bodies should look into the possibility of opening and running such training centres. I am sure these will tremendously benefit the industry !
The third issue is market growth. This is more general in nature and is dependent on national economy in general. Most of the international agencies are bullish about Indian economy and have predicted a growth rate of around 7.5 % for the fiscal 2018-19. If we go by these predictions the Indian economy as well as the metals industry will do well in this fiscal !
Generally, the Indian metals industry seems to be going well.Due to increase in infrastructure projects, the demand for non-ferrous metals is increasing steadily. A lot of new applications for the industry sectors like extrusion, copper are being developed which are sure to give support to the demand curve. The most important factor is auto industry. Huge amount of castings go into a vehicle and to say so, foundry sector growth is largely associated with the performance of auto industry. Now auto sector fortune depends on sale which is influenced by road condition, bank interest rate as well as growth of economy in general. Considering all these factors, auto sector seems to be doing well these days and foundries can surely look forward to a bright future.
Today, Indian metals industry is on crossroads. A lot of opportunities are emerging and at the same time, it is surrounded by numerous problems. Last few quarters have seen a steady increase in metals demand, thanks to mega infra projects being implemented by the central as well as many state governments. A sustained increase in demand can transform the industry sentiment and encourages business houses to plan for the future, think of capacity expansion and so on. It also improves the bottomline and influences the price curve in a positive way. Presently, most of the commodities in the metal process chain have somewhat regained the comfort in pricing which can ensure smooth running of the enterprise and expect some growth in the future. The customer industries like infrastructure, automobile are putting up impressive growth figures and this will surely translate into higher demand in coming months. Recently presented union budget for the fiscal 2018-19, apart from its provisions for the farming sector, emphasizes on infrastructure development in the form of railways, airports, sea ports, metro projects etc. which certainly promises bright future for our industry. It also estimates that Indian economy will grow by 7.2 to 7.5 % in this fiscal. I am sure if the economy really grows at this rate, all the industries including ours will tremendously gain. It can attract huge capital not only from India but from every corner of the world. In my opinion, the technology one employs, the processes he uses, these things are going to be the key parameters in business. Further, the level of automation, using IT based solutions like Industry 4.0 in manufacturing, are going to play a very crucial role in the future. The success of any enterprise depends on how quickly it adapts itself to this new environment. To say so, the future seems bright but the journey is corrugated. Lets see how the things unfold !
Since last few years, MENA region has been identified as one of the most growing economies of the world. This growth story started around turn of the century and had a smooth run till 2008 global economic meltdown. Many economies in the developed world suffered a big jolt and since the economies of many countries in MENA region are closely associated with western world, they also felt huge tremors. Infrastructure creation was at the core of this economic growth and due to crunch in liquidity, many infra projects were halted. The metal demand suddenly dived down and many enterprises associated with this industry witnessed a huge setback, few had to even down their shutters. Many jobs were lost.
All of us know that the collapses are sudden where as the growth is always gradual. The region also started gaining back the lost ground. Slowly the infra projects re started and the metals demand started recovering. Oil price crash happened around 3 years back and it had a similar impact on infra projects and metals demand. Now the oil prices are somewhat better which has improved liquidity situation to some extent. Naturally, the steel industry and the economy in general are on recovery path.
Another factor which has been impacting the economic activity is political instability. The region has been unfortunate on this count and few countries in MENA are going through political instability which is adversely affecting the economy and the industry.
With all these ups and downs, MENA region still offers great opportunities for metals business houses around the globe especially in aluminium sector. It consumes substantial quantity of aluminium mainly for its infrastructure development needs. Thus steel raw material suppliers have a sustained interest in this region. Apart from the primary aluminum producers, there are numerous extrusion units, rolling mills which cater to the growing needs of the industry. Infact, the whole MENA region can also be called as a big aluminium hub. In spite of the tremors of slowdown this industry sector has been growing continuously for the last so many years.
Overall, I feel that MENA region offers a tremendous opportunity for metals industry and I look forward to a vibrant, growing and sustainable industry in coming time !
The last few years had been extremely corrugated for the metals industry. Slow down in the developed world, oil price crash, unstable political situations in many countries and regions, these and similar issues have arrested the economic growth and has adversely impacted the metals demand. On the other hand it is also a fact that metals demand is continuously rising, may be not as expected, but rising. This proves the point that in metals sector, one has to be a really long term player to be able to sustain and grow. Short term outlook of any nature will poison the industry sentiment and kill your own enterprise.
India too witnessed fluctuations in metals demand in the past few years but on year on year basis, the demand seems to be growing. Last few years saw an added emphasis on infrastructure projects and construction sector which are the biggest customer industries for metals. The metro rail projects in many cities, modernization of airports at various locations, massive road building drive also provided the required impetus to the metals industry. New opportunities in modernization of railways and opening up of defence sector will further strengthen this sector. All this improved the numbers as well as the industry sentiment to a large extent. Now most of the metal producers in the country have embarked upon sizable expansion projects. This only shows their confidence in the economy’s future.
The future of foundry sector largely depends on automobile and engineering industry. Both these industries are doing fairly well in past few quarters and are expected to keep a similar pace in the future. This can give a good amount of confidence to foundries and encourage them to invest further in the business. In this situation, Indian metals industry seems to be more interested to cater domestic requirement rather than running after unsure exports markets.
Even if the business prospects are good, Indian metal producers and processors have to upgrade themselves to get the full advantage of this upward economic movement. Most of the processors fall in SME sector and operate with outdated technologies and processes. Naturally this reflects in the final product quality and compromise the business prospects too. Even the big and main producers have to adopt concepts like Industry 4.0 which can substantially enhance the efficiency and induce the much required transparency in the whole system.
I have been always a firm believer of ‘Indian Growth Story’ and strongly feels that the year 2018 will be a much better year than 2017 for metals sector !
Automobile industry in the country as well as globally is passing through a huge transition and perhaps in few years time, the meaning and manifestation of ‘mobility’ will be altogether different !
The last few years saw an enhanced consideration for aerodynamic models, fuel efficiency, impact resistance etc. This led to a gradual shift of some component materials from steel to aluminium and even to composites. Although steel is the most important material and cannot be replaced due to its high strength and impact resistance, the non critical parts have shifted to other materials. This was the period when all the major automakers built their manufacturing facilities in India. This gave a big boost to foundries and auto component industry in the country and India slowly emerged as auto and auto component manufacturing hub for global consumption.
Now, the next generation mobility will employ new technologies and processes like 3D printing and Industry 4.0 and gradually our roads will be flooded with first hybrid cars (which can use fossil as well as electricity as fuel) and then electric cars. Driver less and ‘connected’ vehicles are also not very far. Tesla electric cars are already on the road in the US and have become very popular in a short time span. Industry analysts feel that this change will not be sudden and it will take 7 to 10 years for the industry to completely shift to electric cars, though hybrid cars will become popular in next few years.
This transition in automobile industry will impose a great impact on metals sector. It is obvious that an electric vehicle will have only few metal parts and will consume very less castings as compared with today’s requirement. India’s foundry sector is third in the world ranking in terms of volume (only after China and the US) and produces around 9 mt of castings per year. Its fortune is thickly connected with auto sector and is expecting a double digit growth rate in coming years. With these new developments in auto industry, the long term fortune for foundries look bleak. Will these new structural changes in auto industry have a big dent on foundry and auto component manufacturing sector ? Do we have to look for and develop markets other than auto sector ?
Though 7 to 10 years is a rather longish time frame, we have to address this issue now..