Steady rise in metal prices is a big risk for the automotive industry

The steady rise in metal prices is set to raise raw material costs for automakers and reverse the gains in margins accrued to the industry in the past few years from benign commodity and energy prices.

The pressure on the industry’s operating margins was already visible during 9MFY21. Analysts expect more pain for automakers since prices of steel and non-ferrous metals, such as copper, aluminium, and zinc, have increased further in three months.

Hot-rolled coil prices in China — that acts as the global benchmark for steel prices — are up 28 per cent since the beginning of the current calendar year;