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Russia-Ukraine war and the changing trade dynamics

Russia-Ukraine war and the changing trade dynamics


Mills feel pressure of high raw material prices

Elevated input costs are squeezing margins and may force secondary mills to either shut down temporarily or cut production. However, with finished prices rising for early March sales, primary mills may want to capitalise on the same and sustain their production levels.

January-March is usually the best period in terms of domestic demand since weather supports construction. Also, government infrastructure projects have deadlines to meet towards the fiscal year-end.

Automotive demand is looking up. January’s total vehicle production has already improved to 18.61 lakh units against Nov-Dec’21’s around 16 lakh units. The consumer durables industry is eyeing 12-20% growth in summer sales in 2022 over pre-pandemic levels.

However, if prices remain too high, downstream sectors may recede to the sidelines to await a price correction. Steel prices will remain high, propped up by two factors — the sizzling raw material prices, and energy crisis, aggravated by the Russia-Ukraine war. With the West slapping sanctions, most importing countries are scouting for alternate sourcing destinations, fuelling inflation.