If India was still a net importer of copper, then it would be all good if global copper prices kept declining into 2014 (as we began laying out in Part One.) But lately, the country has turned into a net exporter of the metal, and therein lies the rub.
Around 30 percent of India’s copper demand comes from its telecom sector and about 26 percent from the electrical sector. Then other sectors like building and construction, engineering, transport and consumer durables add to this demand.
The country is not a major miner of copper ore itself (it has 2-3 percent of global reserves), but produces the refined forms of copper. From a single, state-owned refinery, India now has two more, adding to the production capacity of the refined form of the metal.
But already, the bottom lines of these companies are under pressure.
In 2013, because of the subdued global prices, their profitability was affected. If the situation continues into next year, it could definitely be an area of concern for these three refiners.
Consumption of refined copper both within the country and outside is something to watch out for next year. China’s downswing in their domestic economy earlier this year must certainly be playing at the back of the minds of these refiners. But like other research firms have predicted, there could be a recovery there, and with an expected recovery of the US economy, it could mean the generation of renewed demand.
India is facing general elections in the first half of 2014, and once that is over, and if a stable government is in place, it could, in all likelihood, kickstart the economy, leading to more copper demand.
So everyone is hoping that all these factors will help keep the copper market balanced in 2014,and send prices above the expected US $7,000-per-metric-ton mark. Learn more about MetalMiner’s copper price forecasting offerings.
What This Means for Copper Buyers
Indian importers, though, will continue to make merry. India imports about 400,000 tons of copper ore from Chile, Indonesia, Australia, and Canada. Falling international copper prices for this lot is always good news.