Approximately 10,000 small and medium secondary copper processing units , with a cumulative capacity of 2.5-3 lakh tonnes, producing 20 per cent of India's total output, are looking at other business avenues due to high volatility in the metal's prices globally.
HEAVY POUNDING
Entry of hedge funds, institutional investors in copper trading on LME and COMEX has mainly been responsible for the volatility
Handicrafts makers could be forced to use imported virgin copper which may lead to 15-20 per cent rise in the prices of their products |
Engaged in the manufacture of handicraft articles made of pure copper and brass (an alloy of copper, aluminium and zinc), these units have been affected badly, especially in the last one year, with the entry of hedge funds and institutional investors in copper trading on the London Metal Exchange (LME), COMEX and Shanghai futures markets. | |
| Analysts believe if these units are closed then handicrafts, in which India enjoys an unique identity, would be forced to use imported virgin copper, which would raise their product prices by at least 15-20 per cent. |
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| Unlike hedge funds and institutional investors, who have the money to pour funds into the market, small and medium size units are incapable of arranging finance for hedging risks. |
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| "On Thursday, price projection is a big challenge," said Rohit Shah, former president of the Bombay Metal Exchange (BME), who closed down his secondary copper processing unit with an annual capacity of 18,000 tonnes. |
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| "Like me, nearly all copper suppliers to handicrafts sector have been struggling to cope with the price volatility." |
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| Because the re-processing units are based largely in Jamnagar, Rajkot, Moradabad, Mirzapur, the proximity of ports and inland container depots (ICDs), the large storage centres of copper scrap and seconds, is much wider which adds further cost to the production units. |
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| Additionally, these units are continuously inspected by the official of State Pollution Control Board and excise department - an unwanted exercise, quipped Shah. |
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| India's copper reprocessing industry, which constitutes about 50 per cent of the country's 1.3 million tonnes of metal production, has been performing badly because of the steep rise in global copper prices in the last three to four years. The price has trebled during this period with current price quoting at $8,498 a tonne. |
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