New Delhi: The high price of coal will adversely impact the profitability of domestic non-ferrous metal companies mainly operating in the aluminium and zinc space, ICRA said on Monday. The domestic e-auction premium on coal, though it has softened in recent months, continues to remain high at around 300 per cent.
“In the domestic market, power costs have significantly increased for domestic base metal companies, owing to the lower availability of coal linkages to non-power sectors and elevated coal prices in both domestic e-auction and the international markets,” ICRA said in a statement.
Besides, the price of alumina decreased along with the price of aluminium, giving some respite to the non-integrated players.
High cost of coal remains a concern in near term
“Owing to the twin onslaught of corrections in metal prices and continued high coal costs, the estimated operating profitability of domestic players is likely to contract by 600-700 bps in FY2023 after a weak performance in Q1 FY2023,” ICRA Senior Vice-President and Group Head, Corporate Sector Ratings Jayanta Roy said.
The high cost of coal remains a concern in the near term.
The rating agency said that it has changed the outlook of the base metal industry to stable from positive in July on account of this likely reduction in profitability, Roy stressed.
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