The COVID-19 pandemic — and even conditions prior to that — has turned India into a net importer of copper, with at 132,445 tons imported between April 2019 and January 2020.
According to a new report, at least 65% of India’s copper needs were provided by imports, especially from Japan, the Times of India reported. Japan accounted for 77% of total imports during the current financial year, a result of India’s preferential trade deal with the country.
The signs were there throughout the entire fiscal year. Sector analysts were pointing at the dropping of international prices, especially since February 2020, because of the pandemic. The drop in prices arose because copper inventory kept piling up due to the coronavirus outbreak that originated in China. What compounded the problem was the fact that China is a major consumer of copper — but there was no intake there, too, Care Ratings in a study.
According to a report in the Business Standard, just before COVID-19 hit Indian shores, the 968,500-ton Indian refined copper industry was already facing some difficulties due to the shrinking requisition of copper.
The report notes Hindalco Industries had reported in its third quarter (i.e., October to December) report for the 2019-2020 financial year that domestic copper demand was up by 2% to 193,000 tons from 189,000 tons in the same period of the previous year. This put pressure on domestic copper producers who were finding their share being whittled down by cheaper imports.
Now, the inevitable has happened: India has turned out to be a net importer of copper so far this fiscal year.
The new study showed the market share of imports rose to 51% in Q3 of fiscal year 2020 versus 40% in Q3 of fiscal year 2019.
In March this year, LME copper prices fell below U.S. $5,000 per ton, marking a new low. COVID-19 had also seen a rise in the inventory of copper at the LME and the Shanghai Futures Exchange (SHFE).
Copper stocks at the LME warehouses, which stood around 147,000 ton in December 2019, have risen to 231,000 ton as of March 18. Copper inventories at SHFE warehouses stood at 377,247 tons on March 20, up from 123,647 tons in the end of December 2019. The study said higher stock levels reflect poor demand, which impacted copper prices.
Experts believe European and U.S. markets will continue to remain subdued in the next quarter, too, with global copper prices expected to remain in the range of $4,500-$4,900 per ton.
Meanwhile, a report in the Swarajya magazine said what is India’s loss has turned out to be neighboring Pakistan’s gain.
The Sterlite copper plant was ordered shut by the Tamil Nadu government in May 2018 after violent protests demanding its closure. As a result, Pakistan gained immensely, especially in the opportunity to ship the non-ferrous metal to China.