Copper: Reign of the metal
How according to you is the overall copper market in India?
The copper market has seen a steady growth in the country, a major boost for the industry has come in from the implementation of GST, which was probably the most awaited reform to-be implemented by the Government of India. Though GST is still in its early stage, it has simplified the tax structure and thus has improved the ‘ease of doing business’, it has also been planned to decrease the operational costs across all industries. It is important to note that the performance of the copper industry is highly dependent on the performance of sectors like power, construction, telecom, and automobiles; thus, they cannot be overlooked.
The government has positively encouraged various push into numerous sectors for the growth of renewable energy making India energy efficient by 2022, norms for safer circuitry and wiring, electrification of vehicles, etc. This not only gives a boost to their madden project, “Make in India” but it also lifts the copper sector in the country. With this rate and progress, we are assertive that copper in the Indian markets will soon become a game-changing metal.
Is the industry on par with the international markets?
Copper markets will continue to see persistent growth in demand from countries like China, India and those from South East Asia. Indian exports of manufactured / engineering goods continue to be extremely poor. The government of India had signed various trade agreements with an intention to scale-up the domestic industry by stimulating exports, but it is proving to be highly ineffective. FTAs has led to tax-free imports from countries in ASEAN, Japan which are proving to be cheaper than domestically produced goods and this is impacting the domestic manufacturing sector like copper tubes, copper rods, motors and wire/cable markets quite adversely. The main reason for this is the inverted duty structure, which we have in place, domestic manufacturers of refined copper end up paying a higher duty for their inputs (copper concentrates) compared to imported finished products. This is a serious concern as it may render domestic manufacturing to be uncompetitive and is likely to impact the ‘Make in India’ policy in the long run.
What can be the approximate market size? Expectations in the coming year.
Based on a third-party report commissioned by ICA India, the current demand for copper in India is ~970 kt with the electrical sector accounting for ~54% of the total demand. The total copper demand is expected to reach ~1,812 kt by FY26. Incremental demand: ~840 kt. The electricalsector would account for ~56% of the total demand.Based on the planned capacity additions, the total capacity for refined copper in India will increase from present 1,000 kt to 1,400 kt. It ismeasuredagainst a total copper demand of ~1,812 kt. ~40% is estimated to be met through supply from domestic refined copper producers with the rest expected to be met through imports. There exists a potential gap of ~230 kt between demand and supply.The copper sector in India is constantly blooming and we are sure that in the coming years the market will just get bigger for more opportunities and businesses.
Which sectors are the major consumers of copper?
Copper is not only used in our homes and offices but also in the circuitry, connectors and components that make virtually all electronic devices function due to its ductility that is valued for its high thermal and electrical conductivity. In fact, the metal’s usage in a wide-variety of core industries has resulted in the investment community turning to copper prices as a sign of overall economic health, impelling the name ‘Dr. Copper’. Evolving in line with the ‘Make in India’ initiative, India has all the ingredients that can help boost copper demand; given its billion-plus growing young population, rapid urbanization, huge infrastructure projects and investments, proposed industrial corridors and electricity grids. Currently, ~50% of the copper demands’ met through supply from domestic refined copper producers with ~30% met through imports. Wires and cables account for ~44% of the electrical products demand. Copper is widely used in sectors like motors, automobiles, transformers, alternators, agricultural pumps, consumer appliances, construction, transportation and renewable. Almost, 25% of the total demands’ met through recycled copper in the country.
Is the use of copper on demand into the welding sector in India? Your say on this.
In the past, the Indian welding industry was dominated by low technology and very rare technological innovation. However, in recent years, the demand for automatic and semi-automatic welding electrode production machine has been rising. Simultaneously, low budgets and recession have marked the ongoing popularity of manual, economical techniques. Increased FDI equity inflow in India has contributed to the rise in projects. Just like copper, welding has it key application in segments like automobile & transportation, building & construction, marine applications, power sector, oil & gas, wear plate and other applications such as repair & maintenance, and pipelines among others. The growth and expansion of end-user industries such as automobile & transportation, building & construction has given a boost to both these industries. The welding and copper industries are interrelated and interdependent on one another. Thus, the rising demand for copper is constantly promoting the use of modern and unique uses of copper, simultaneously increasing the demand of welding equipment in the country.
Your expectation from the welding industry, when copper is concern?
Copper welding is not hard. The heat required for this type of welding is approximately twice that required for steel of similar thickness. Copper has a high thermal conductivity. … Oxygen-free copper (deoxidized copper rod) should be used rather than oxygen-bearing copper for gas welded assemblies. Copper availability in all forms is not a challenge anymore in India. The use of right quality of copper based on the end application is very essential for providing the best solution to the end users. This will provide then with a trouble free and reliable operation.
What are the major challenges the copper industry faces? How do you manage to cope up?
The copper industry faces many challenges, as the government needs to re-examine the Free Trade Agreement (FTA) that has created complications for export and raised customs duty for downstream products so that it does not affect the domestic industry in the country. Another, most important challenge is high capital cost. The interest rates in India are very high (8-9%) as compared to the European countries (1%). High volatility in the price of copper is also a big challenge. Government’s inverted duty structure under which finished products are taxed at lower rates than raw material; which hits the manufacturing sector. The government also needs to pay attention as a lot of copper scraps are coming from producers who do not have machines to remove impurities from copper. Copper scrap, druid, residues and dross get converted to a low purity wire bar and thereafter into low purity copper wires and cables. These cables pose a safety hazard. In addition, with the usage of low-quality copper, energy efficiency level will come down and it breaches safety standards.
Being a superconductor, copper is applied to building management, home automation system, data centers and other verticals for its properties. Copper demand will proliferate due to surging battery electric vehicles as well as government’s initiative to make India energy efficient through renewable resources. India and many countries in the world plan to reduce (and even ban) fossil fuel vehicles. Thus, demand for copper from battery electric vehicles will increase. Also because copper is a highly efficient conduit, it is used in renewable energy systems to generate power from solar, hydro, thermal and wind energy across the world.
India has one of the best standards comparable to the best in the world but lack of quality marking and absence of enforcement of standards & codes have definitely been significant hurdles for the copper industry and its usage in India. The copper industry has undergone technological and innovative changes to provide better usability to its end users. Small diameter (shift from 7mm to 5mm) inner groove tubes for the condenser coils of the room air conditioners will make the products more cost effective and energy efficient, which will benefit both – the manufacturer and the consumers. Similarly, the die-cast copper rotors in place of fabricated copper rotors have increased the productivity of pump manufacturers and helped provide better quality pumps to the farmers.
As the Indian economy is constantly growing (based on the per capita income), growth in disposable income, increasing urbanization is resulting in the formation of large megacities and new cities, the infrastructural push led by the government through various strategies and policies. We are sure it would lead to a rise in copper demand across all verticals of businesses. This surge in demand will witness more innovation that will outgrow the industry to adopt energy efficient copper alternatives.