Domestic refined copper
production fell 47.1 per cent in quarter ending June (Q1FY19), leading to an increase in price and fall in exports. Though the fall in production was mainly due to the closure of Vedanta's smelter plant at Thoothukudi, the shutdown of smelters of Hindustan Copper
(HCL) and Hindalco for maintenance purposes also had an impact.
Tuticorin plant has a capacity of 400,000 tonnes per annum, accounting for 40% of the country’s copper
smelting capacity. The facility was shutdown after violent protests from locals.
According to Care Ratings, the production drop has had a domino effect, leading to a sharp fall in exports. Exports from India, which used to be the net exporter of refined copper, dropped 91.6 per cent this quarter. In the same quarter last year, exports had increased by 70.1 per cent. Imports, on the other hand, increased by 221 per cent in the last quarter.
Domestic consumption has seen a decline as the rise in copper
prices presented aluminium as an economical alternative. Aluminium can be used as copper's replacement in wiring in power cable and electrical equipment. Demand for copper
in the domestic market is largely dependent on electrical (34%), building & construction (8%), automobiles (11%) and consumer durables segments (8%).
prices rose 21.6 per cent year on year during first quarter of 2019 as compared to the corresponding period of the previous year.
LME prices of copper
were volatile during first quarter of 2019 due to trade tensions between China and USA. Prices of copper
had risen during the first week of June’18 when the verdict of the permanent closure of Vedanta's smelter plant was announced. The price was $6,955 a tonne in June 2018 as compared to $6,796 a tonne in March 2018.
Production of refined copper
is estimated to be around 510 KT in 2018-19. Production from HCL and Hindalco is expected to pick up during third and fourth quarters, said CareRatings. If Tuticorin is allowed to resume operations, production of refined copper
could be around 710 KT in FY19, a 39 per cent increase from the current slated levels but still below the production during FY18.
Domestic demand is estimated to be around 530-535 KT during FY19. Global copper
prices is expected to hover around $6,200-6,400 per tonne during the short to medium term period on a monthly basis.