Copper Lower on Global Cues

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Copper futures fell by 0.2 percent to Rs 421.75 ($8.43) per kg on February 27) after traders reduced positions, taking weak cues from global markets, reports Business Standard. At the Multi Commodity Exchange (MCX), the June contract for copper lost 85 paise ($0.017), or 0.2 percent, to Rs 421.75 ($8.43) per kilogram, with a trading volume of 21 lots.

Headquartered in Mumbai, MCX is a state-of-the-art electronic commodity futures exchange. The April contract shed 0.16 percent, to Rs 416.55 ($8.33) per kilogram, with a trading volume of 493 lots.

According to the report, the fall in copper futures prices was mostly due to a weakening trend at the London Metal Exchange (LME). The price fluctuations in LME in turn depend upon the total production level of the copper in the world. The report further said that copper prices for three-month delivery fell 0.9 percent to $8,457.25 per metric ton in early trading on Feb. 26 at the LME.

Market analysts expect that India’s copper demand will likely grow at least 8 percent this fiscal year as corporates build power units to meet their electricity demands. Copper is the most common material used for electrical wiring, transformers, and cables. Almost half the country’s red metal demand comes from power projects.

This fiscal year, the power sector is expected to grow more than 10 percent, meaning more copper is required this year.

Power Targets

The Indian Power Ministry has set a target for adding 76,000 MW of electricity capacity in the 12th Five-Year Plan (2012-17) and 93,000 MW in the 13th Five-Year Plan (2017-2022).

Even as India’s surging automobile sales and strong housing demand ensure copper demand to increase. According to industry estimates, automobiles represent 8 percent of India’s copper demand while housing represents 7 percent.

Sterlite Industries, Hindalco, and Hindustan Copper are three major Indian producers of copper in India. Among these three companies, Hindustan Copper is the government-owned company and the other two are in the private sector. India is emerging as a net exporter of copper from being a net importer on account of rise in production by these three companies.

Globally, Chile accounts for 34 percent of total world copper mine production; Peru, the US, China, Australia and Indonesia together are responsible for around 32 percent. Growth in refined copper usage has been especially strong in Asia, where demand has expanded more than five-fold in less than 30 years.

International Copper Association (ICA) estimates that India has recoverable reserves of 537.86 million tons of copper. Indian copper reserves constitute around 1 percent of global reserves. Although India is not a major producer of copper ore, it is an important producer of refined copper. India’s production of refined copper is approximately around 4 percent of total world production and in terms of figures it is around 600,000 tons. Indian mined production of copper stands at around 30,000 tons, around 0.15 percent of global production.

The annual per capita consumption of copper in the country is 0.47 kg, which compares poorly with China’s 5.4 kg and the world average of 2.7 kg. India’s consumption of refined copper per year is around 535,000 tons, which accounts for only 3 percent of the world copper market.

TC Malhotra contributes to MetalMiner from New Delhi.

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