Our metals index provides early insights on Indian manufacturing

To get an early sense of where Indian manufacturing is headed, it can help to watch prices of companies' key inputs -- especially metals. To help illustrate this relationship -- and examine a key component in local inflation -- CEIC has introduced a metals price index for India based on spot prices obtained from the National Commodity and Derivatives Exchange (NCDEX).

Our index includes both the most important industrial metals -- copper, steel, lead, aluminum and zinc -- as well as gold and silver. We've weighted the different metals based on production statistics from the Indian Bureau of Mines; steel gets the heaviest weighting*.

Our first chart uses a year-on-year comparison to more easily visualize how different metals influence the index. Overall, our index started the year about 2.6% higher than year-earlier levels. But from April through July, it was showing year-on-year deflation, driven almost entirely by lower steel prices versus Q2 2024. The index recently returned to a year-on-year advance, driven by zinc and to a lesser extent aluminum and precious metals.

We then charted our measure against the Index of Industrial Production, one of India's key indicators -- which is released only monthly -- as well as its manufacturing component. If metals prices are rising, that can indicate manufacturing facilities are humming along and bidding up the price of their raw ingredients; if metals are slumping, this could indicate idle factories cutting back their orders.

The recent monthly IPI data was for July. It showed an uptick for both headline industrial production and the manufacturing component. We've highlighted the period where our high-frequency metal-price index was pointing to this outcome. The plateau since then could indicate a more moderate IPI print will be released for August.

Finally, we track the absolute, un-weighted components of our index since the start of 2024. Precious metals have risen the most, driven by gold's global gains.

*Contact us if you would like further detail on the methodology.

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