India’s industrial production, as measured by the Index of Industrial Production (IIP), contracted for the sixth month in a row in August by 8 per cent y-o-y. However, one good news is that basic metals production improved from a year ago levels. The basic metals sub-index in IIP recorded a growth of 0.1 per cent y-o-y in August. This is significant, since the index was in contraction since February and in April recorded the steepest drop of 70 per cent.
Another optimistic signal is also the recovery in the Purchasing Managers’ Index (PMI). The PMI, which was 52 in August, moved higher to 56.8 in September — the fastest growth since January 2012, recovering from 27.4 in April.
Government housing and electrification projects have been driving demand for metals, say physical market participants. Consumption of long steel has seen sharp recovery – it was 4.5 million tonnes (mt) in August,