Copper strong despite high prices
Copper consumption in India remains unaffected by price instability in global market.
By Deepa Krishnan, TNN |
MUMBAI: Copper consumption in India remains unaffected by the price instability in the global market. Copper has rallied to hover around the $8,000 per tonne mark in the second half of the year.
Surendra Mardia, senior vice-president of Bombay Metal Exchange (BME) said, “Copper has been trading between $7,500 and $8,000 per tonne in the last few months, but demand seems to be getting stronger. The copper users have now begun to accept high prices as a reality, and are working it into their costs.”
Copper users like the wires and cables industry, utensils and brass units account for 70% of the copper demand in India. According to International Copper Promotion Council (India), India may become a net copper importer in the next few years with current annual production at 1 million tonne and consumption at around 0.5 million tonne.
A rise in copper demand as projected would also improve the utilisation of the domestic capacity in smelting and refining. And as domestic demand rises, the primary producers would be expected to create additional capacities to meet both the domestic and the export markets.
Further, it is estimated that between 30 and 40% of the domestic demand in India is met by recycled copper. Approximately 90,000 tonne of copper scrap is imported and another 60,000 tonne is generated out of the rejects coming out of the existing copper consuming units such as manufacturers of transformers, motors, cable, house wire and old transformers.
Globally, copper demand is expected to be high. According to MAPE Admisi Commodity Research, copper is expected to test $8,310 levels which is also its yearly high in the current bull rally. Markets could consolidate in the fourth quarter of 2007 and first quarter of 2008 is expected to remain in the range of $7,000-8,500.
As consumer confidence in US improves, copper consumption is expected to grow in the later half of 2007 and in 2008. China, which saw heavy imports in early 2007, is expected to remain high, putting pressure on the demand.
According to market indications, supply of copper concentrate and cathode is also very tight for the second half of 2007. Further, labour unrest in mines are expected to keep supply tight.
Surendra Mardia, senior vice-president of Bombay Metal Exchange (BME) said, “Copper has been trading between $7,500 and $8,000 per tonne in the last few months, but demand seems to be getting stronger. The copper users have now begun to accept high prices as a reality, and are working it into their costs.”
Copper users like the wires and cables industry, utensils and brass units account for 70% of the copper demand in India. According to International Copper Promotion Council (India), India may become a net copper importer in the next few years with current annual production at 1 million tonne and consumption at around 0.5 million tonne.
A rise in copper demand as projected would also improve the utilisation of the domestic capacity in smelting and refining. And as domestic demand rises, the primary producers would be expected to create additional capacities to meet both the domestic and the export markets.
Further, it is estimated that between 30 and 40% of the domestic demand in India is met by recycled copper. Approximately 90,000 tonne of copper scrap is imported and another 60,000 tonne is generated out of the rejects coming out of the existing copper consuming units such as manufacturers of transformers, motors, cable, house wire and old transformers.
Globally, copper demand is expected to be high. According to MAPE Admisi Commodity Research, copper is expected to test $8,310 levels which is also its yearly high in the current bull rally. Markets could consolidate in the fourth quarter of 2007 and first quarter of 2008 is expected to remain in the range of $7,000-8,500.
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As consumer confidence in US improves, copper consumption is expected to grow in the later half of 2007 and in 2008. China, which saw heavy imports in early 2007, is expected to remain high, putting pressure on the demand.
According to market indications, supply of copper concentrate and cathode is also very tight for the second half of 2007. Further, labour unrest in mines are expected to keep supply tight.
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