In the past 10 days, copper prices have risen about 8%.
by a steady rise in global copper prices, around 500 small and tiny secondary smelters in India are planning to revive these units to meet rising demand from user industries.
A majority of these plants, with a combined capacity of about 250 tonnes per annum, were closed when copper prices slipped below the cost of production about 18 months earlier. Now, they were considering a revival to cash in on rising global copper prices, said Surendra Mardia, president of the Bombay Metal Exchange (BME), a Mumbai-based copper and allied products’ trade body.
The global benchmark for the cost of production is around $3,500 a tonne. Copper prices on the benchmark London Metal Exchange (LME) hit a multi-year low of $2,812 a tonne on December 30, 2008, on plummeting consumer demand in the wake of global economy drawdowns after the Lehman Brothers collapse.
Domestic small and tiny smelters ran out of orders. Many units diversified for survival. Now, looking at a rebound in prices, they were considering reviving their plants, Mardia added. In the past 10 days, copper prices have risen about eight per cent, sufficient for secondary smelters to freshly invest in closed units.
Meanwhile, Standard Chartered has raised its 2011 copper forecast to $8,325 a tonne, from $7,900, because of slower-than-expected starts to projects. The metal is now less than 15 per cent off the record, which is set to be breached this time, says a base metal analyst.
Initially, demand will pause, as happens during a sudden price rise. But, once this level of copper price looks stable, consumers will start purchasing again, says Rohit Shah, director of BME.
A majority of these units are in talks with banks to source funds for their working capital requirement. If copper prices continued at this level, a possibility now, all these plants would become operative before October 1, he added.
Secondary copper produced by small units is used in handicrafts, sanitary components, bicycle components, motor components and manufacturing industries.
They procure copper scrap as raw material from abroad and smelt it to supply to the consumer industries. Secondary copper producers, led largely by unorganised sector players, contribute nearly 40 per cent of India’s copper production
The demand for India’s handicraft products has revived abroad. Also, there is rising consumption from the housing sector in emerging economies. The Indian government has announced a massive investment on housing, which consumes nearly 30 per cent of India’s copper production of nearly two million tonnes.
