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India's copper production shrinks 6.4%; Sterlite Copper, Hindustan Copper see massive slump in output

In the first of this current financial year, consumption of refined copper grew 8.8 per cent against a fall of 2.7 per cent in the corresponding period last fiscal. The domestic copper demand was thus met through imports

twitter-logoNiti Kiran | December 11, 2019 | Updated 19:16 IST
India's copper production shrinks 6.4%; Sterlite Copper, Hindustan Copper see massive slump in output

The domestic production of refined copper in the current fiscal continues to remain stressed falling 6.4 per cent to 229.1 thousand tonnes in the first seven months. Though, it shrank at a steeper pace of around 50 per cent during April-October 2018, on a year-on-year basis. After growing consecutively for three years between 2014-15 and 2016-17, it took a turn for the worse in last two years-fell 4.1 per cent in 2017-18 and 40.3 per cent in 2018-19.  The permanent shutdown of the 400 KT, Tuticorin smelter which accounted for 40 per cent of the country's copper smelting capacity led to the domino effect of a sharp increase in the country's imports and fall in the exports, as almost half of the domestic copper production in India is exported.

The three major players that dominate the copper industry in India include - Sterlite Copper, Hindalco Industries and Hindustan Copper. As per CMIE, production from Sterlite's operating plant at Silvassa declined by 23.5 per cent to 35.5 thousand tonnes during April-October 2019. Hindalco Industries managed to maintain it's year-ago level of production at around 190 thousand tonnes. Production from Hindustan Copper's smelter halved to 4.1 thousand tonnes during April-October 2019 compared to 8.4 thousand tonnes in April-October 2018.

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In the first of this current financial year, consumption of refined copper grew 8.8 per cent against a fall of 2.7 per cent in the corresponding period last fiscal. The domestic copper demand was thus met through imports. Imports of refined copper that grew at a compounded annual growth rate of 13 per cent during 2013-2018, shot up over 100 per cent in 2018-19. The closure of Sterlite's copper plant at Tuticorin in May 2018 brought down availability of refined copper in the domestic market. While imports rose by 70.2 per cent, exports of refined copper declined by 7.1 per cent to 17.1 thousand tonnes during April-October 2019 compared to the year-ago period.

Imports of refined copper grew 70.2 per cent to 95.4 thousand tonnes during April-October 2019 from 56 thousand tonnes in April-October 2018. On, the other hand, exports declined by 7.1 per cent to 17.1 thousand tonnes during the period. It plunged by 87.3 per cent in 2018-19. A surge in imports along with a sharp fall in exports turned India into a net importer of copper in 2018-19 for the first time in 18 years. The highest ever fall in copper production in 2018-19 led to an exponential rise in imports from Japan and UAE-their share rose from 64.9 per cent and 4.3 per cent in 2018-19 to 80.2 per cent and 12.5 per cent in H1FY20, respectively.

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Global copper prices have decreased by 7.9 per cent during April-November 2019 and have slipped to a 2-year low because of the escalated trade tensions between the US and China and the lack of clarity on arriving at a truce. Slowdown in the Chinese economy and subdued global demand prospects have also led to the fall of the red metal. "With the permanent closure of the Tuticorin smelter, and the uncertainty surrounding with its remission, we believe by the end of FY20, refined copper production will be around 450 KT, registering a 1.5 per cent drop from its FY19 level of production," said a CARE Ratings report. The Supreme Court has objected to the restart of the Tuticorin smelter but the matter is under appeal, as the SC directed the company to file a writ petition before the Madras High Court. The report estimates domestic refined copper demand to increase by 7-8 per cent (including consumption of scrap) by the end of FY20. Also, due to the increase in demand, India will continue being a net importer of refined copper during FY20 as well, unless the high court passes the judgement for the remission of the Tuticorin smelter, it added.

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