India was a major copper exporter but with the shutting down of Sterlite plant, it has now turned into a net importer. This has been advantageous to Pakistan, say exporters.
India, a major exporter of refined copper till a few years ago, is set to become a net importer for the third consecutive year as a plant in Tamil Nadu’s Thoothukudi continues to remain shut due to environmental concerns.
India turning a net importer has been both on account of a sharp increase in imports and a contraction in exports. This is mainly due to shutting of a plant of Vedanta’s subsidiary Sterlite Copper, which had a production capacity of 4 lakh tonnes.
According to data available with the government, the import of refined copper increased to 92,290 tonnes in 2018-19, from 44,245 tonnes in 2017-18 while exports declined to 47,917 tonnes in 2018-19 from 3.78 lakh tonnes in 2017-18. This resulted in net import of 44,373 tonnes in 2018-19 from net exports of 3,34,310 tonnes in 2017-18.
The value of copper
Copper is a major input in many industries. The electrical and telecommunication industry had the largest share in copper consumption followed by transport, consumer durables, building and construction and engineering goods.
After three consecutive months of sharp contraction, India’s copper imports have started rising again beginning September on account of an increase in demand from local manufacturing units which have opened up after the pandemic induced lockdown.
Like with steel products, India’s copper exports, especially to China, also rose sharply in the first few months of the current fiscal due to a non-existent local demand as industries remained shut in India due to the pandemic.
A shortage in world refined copper stocks coupled with a strong demand from China has also seen global prices increasing. This has raised costs for local industries, which are dependent on copper for their production, leading to demands from some local industry bodies for reopening of the Sterlite plant.
Higher demand and supply crunch also led to a sharp fall in inventory levels which lent further support to prices, Care Ratings said in its note, adding that the ongoing problem of copper ore mining and a strong demand, particularly from China, is expected to keep copper prices elevated over the next quarter.
“We expect refined copper prices to average $6,500-6,800 per tonne in FY21 vs $5,923 in FY20,” it said.