Two budgetary announcements by India’s government have brightened the outlook for domestic copper producers. One of them is the construction of up five new 4,000-megawatt “ultra mega” power projects, which means consumption of Indian copper is bound to shoot up.
The multibillion dollar projects are being hailed as game changers positive for India’s copper industry by the International Copper Association of India (ICA).
ICA India Managing Director Sanjeev Ranjan said the government realized that there was a strong case for improving the global competitiveness of India by focusing on infrastructure and ease of doing business by bringing in regulatory reforms.
With the announcement of the power projects, another positive for the copper industry was the move by the government to continue with its “Housing for All by 2022’” initiative. Under this plan, about 60 million homes — 40 million in rural areas and 20 million in urban areas — will be built all with copper wiring in the walls.
Both power and housing are sectors that consume the maximum quantity of copper and they now hold the key to this base metal’s growth in the Indian market.
Building on Predicted Growth
At the start of the year analysts following the copper sector had forecast that demand in India in 2015 could see growth, thanks to the government’s decision to allow 100% foreign direct investment in the construction sector, as well as fresh impetus/stimulus given to India’s power sectors.
India sits on some of the largest copper deposits in the world but, due to bureaucratic hassles and other factors, local producers have been unable to mine much of it, thus turning to imports to fill the gap between supply and demand.
A recent report published by Chile’s copper commission, Cochilco, said India surpassed by the US in 2014 to become the fourth-largest overall importer of copper from Chile.
Chile is the number one producer of copper in the world, and exported a seven-year high of 5.66 million tons of the base metal last year. While India had taken the number 4 slot, the top place was reserved for China, which imported about 39% of Chile’s total annual production or about 2.2 million tons.
The author, Sohrab Darabshaw, contributes an Indian perspective on industrial metals markets to MetalMiner.