New Delhi: ICRA has revised its outlook for India's primary aluminium, copper and zinc industry to positive from stable. The rating agency said on Thursday that the revision reflects elevated metal prices, healthy domestic demand and a considerable improvement in earnings visibility for primary producers of these non-ferrous metals in 2026-27.
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According to ICRA, global supply disruptions and low metal inventories pushed non-ferrous metal prices up by 30-40 percent in the first five months of the current fiscal. It expects higher prices to lift domestic producers' operating margins by around 400 basis points to about 35 percent in 2026-27.
"The revision in the industry outlook to Positive is supported by the expected strengthening in earnings and credit metrics of non-ferrous metal companies, aided by healthy domestic demand and favourable metal prices," said Girishkumar Kadam, Senior Vice-President and Group Head, Corporate Sector Ratings, ICRA. He said domestic demand is expected to grow by 8-9 percent in 2026-27. According to Kadam, that growth will come from continued investment in infrastructure, construction, power, renewable energy and electric vehicle-related segments. ICRA said this growth would far outpace global demand, which remains subdued.
Kadam said operating profit per tonne for domestic primary aluminium producers is estimated to rise to around USD 1,575 in 2026-27. "Also, the earnings of copper and zinc entities are likely to improve significantly in the current fiscal," he said.
Stronger earnings are expected to improve the credit metrics of the companies in ICRA's sample set. The agency estimates their total debt will fall to 0.6 times operating profit before depreciation, interest, taxes and amortisation (OPBDITA) in 2026-27, from 0.9 times in 2025-26. It expects interest cover to rise to 16 times from 12 times.
Kadam cautioned that prices remain the main risk. "However, the movement in global non-ferrous metal prices will remain a key monitorable for the industry, given the inherent cyclicality of commodity prices," he said. "Overall, ICRA expects the financial profile of domestic primary non-ferrous metal companies to strengthen significantly in 2026-27."
ICRA said international prices of aluminium, copper and zinc have all risen significantly in the current fiscal. Aluminium prices remain elevated because of continued supply disruptions in West Asia, which accounts for around 9 percent of global aluminium production. Prices eased in July and August as the war-risk premium came down, according to ICRA. Even so, it expects persistent supply constraints and low inventories to keep London Metal Exchange (LME) aluminium prices at USD 3,200-3,300 per tonne in 2026-27, an annual increase of 18-20 percent.
The agency projects copper prices at USD 12,000-13,000 per tonne, about 18 percent above the 2025-26 average. It said this outlook rests on shortages of copper concentrate and tight availability of refined copper outside the US market. ICRA expects zinc prices to be driven by constraints on mine supply and falling LME inventories.
Supply constraints are expected to keep the markets tight even though global demand growth is weak. ICRA projects the aluminium market to remain in a deficit of around 1 million tonnes, because facilities disrupted in West Asia are likely to be restored only gradually. The refined copper market is also set to tighten. According to the agency, inventories are moving to COMEX warehouses in the US amid uncertainty over US tariffs, which leaves less refined copper available elsewhere. Refined zinc supply is expected to stay constrained by weaker mine production and declining ore grades. Global zinc mine output contracted by around 0.5 percent in the first five months of 2026, ICRA said.
In India, production of aluminium and zinc continues to exceed consumption, according to ICRA. It expects this to continue, because domestic capacity is high and manufacturers are likely to keep plant utilisation at high levels. As a result, India's aluminium and zinc producers will export large volumes. ICRA said the risk of these exports not finding buyers would remain low, given how cost-competitive domestic manufacturers are.
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Copper is the exception. Lower domestic production has created a large deficit in India's copper market, which is being met through large imports, the agency said. It does not expect the situation to improve in the near term.
