India Ratings revises outlook on non-ferrous metals & mining

India Ratings and Research (Ind- Ra) has revised the outlook on the non-ferrous metals and mining sector to 'stable' for FY16.
Previously, the sector outlook was "stable to negative".
The agency today said it believes that "in the absence of major market disruptions such as a rise in US interest rate or a hard landing in China, most non-ferrous metal prices are close to the bottom."
Domestically, the metal price realisation is expected to improve on a pick-up in investments in key end-industries such as automobiles, packaging, power and construction towards H2FY16, the rating outfit said in a report.
Ongoing coal blocks auctions would substantially determine the direction of profitability as major players own captive power plants, it said.

The agency expected industry players to sustain realisations and operating profits driven by a steady physical premium. Physical premiums on non-ferrous metals over broad market prices such as London Metal Exchange (LME) are "likely to remain steady" given the dominance of a few large players in India.
The agency does not expect the low aluminium price levels in 2014 to be revisited in FY16, and sees LME prices to continue to increase in FY16.