India’s refined copper demand to grow by 11% in FY24 on govt’s infra development plans, transition to renewable energy – EQ
In Short : The statement suggests that India’s demand for refined copper is expected to grow by 11% in the fiscal year 2023-24. This growth is attributed to the government’s infrastructure development plans and the transition to renewable energy. The increased demand for refined copper aligns with the country’s efforts to enhance infrastructure and promote sustainable energy sources, both of which require significant copper usage.
In Detail : The domestic refined copper demand growth will remain healthy at ~11 per cent in FY2024 and FY2025, outpacing the rate of global growth in copper demand, given the Government’s thrust on infrastructure development and a gradual transition to renewable energy, according to a report by ICRA. Per the report, the price of copper is expected to remain range-bound at current levels of ~8200-8300/tonne in the near term and it foresees a stable outlook for the domestic copper industry.
In the domestic market, around ~40 per cent of the copper is consumed in the infrastructure and construction sector and ~11-13 per cent each in the automobile and consumer durable sectors. An allocation of ~Rs 10 trillion for capital spending in the last Union Budget, coupled with ambitious targets set under the National Infrastructure Pipeline (NIP) is expected to drive copper consumption in the medium term, ICRA said. Further, in the real estate sector, an incremental supply growth of ~30 per cent in top six Indian office space markets and ~10 per cent growth in retail mall space (top six cities) is expected in FY2024, which is likely to spur copper wire demand.
Jayanta Roy, Senior Vice-President and Group Head, Corporate Sector Ratings, ICRA, said, “Significant emphasis by Government of India (GoI) towards the smart city programme, the Defence sector as well as the expected higher penetration of electric vehicles and its associated infrastructure bode well for the domestic copper demand outlook. In addition, the GoI’s ambitious target to achieve 500 GW of renewable energy capacity by 2032 would entail significant capacity addition in the transmission network including for substations and electrical machineries in the coming decade, translating into a healthy domestic copper demand.”
The automotive and transport sectors also play a role in the overall consumption of copper in India. Automotive demand is expected to grow at a moderate pace of ~6-9 per cent in the passenger vehicles segment and ~2-4 per cent in the commercial vehicles segment in FY2024. Also, the increased focus on replacement of old vehicles and on green mobility augurs well for the copper demand. Additionally, investment in the metro rail network and railway electrification would aid domestic copper consumption in coming years, the report stated.
While domestic demand remains healthy, lower production of refined copper in India has seen a deficit in the domestic market, which is being met through increasing imports of refined copper or through direct imports of finished copper products. The imports of refined copper had increased by ~30 per cent in FY2023 and by ~180 per cent in H1 FY2024, and the trend is likely to continue in the near term as well. ICRA, however, notes that a new copper smelter of 0.5 million MT (mmt) by the Adani Group is expected to start from FY2025 onwards which, once stabilised, is likely to reduce the deficit situation to an extent.
On the global front, the copper consumption is likely to remain muted in the current calendar year. “Contrary to healthy domestic demand, moderate growth in China and significant weakness in Europe and North America, amid heightened fears of an economic slowdown, is estimated to result in a flattish global copper demand of ~2 per cent in CY2023. In addition, the global copper supply shows signs of improvement, primarily in China, which is likely to result in a surplus copper balance in the current calendar year. Consequently, copper prices remained under pressure and corrected by almost ~9 per cent in the current fiscal till date. The prices are expected to remain range-bound at current levels of ~8200-8300/tonne in the near term,” said Jayanta Roy.
