India may become a net importer of copper by FY2019-20 if the domestic demand for non-ferrous metal grows at 7-8 per cent, rating agency Icra said today.
"The scope of increasing copper production in India is limited as the refiners are already running their plants at high capacity utilisation levels. Hence, with demand increasing at a healthy rate, India may turn into a net importer of copper by FY2020 if no new plant is commissioned in this period," it said in a statement.
However, if domestic demand for copper grows at the current rate of 7-8 per cent, the market is likely to turn into a deficit in the next couple of years, it said.
Regarding the domestic demand-supply scenario, the rating agency said that the consumption of the three key non-ferrous metals --aluminium, copper and zinc,--registered 7-10 per cent growth in nine months of FY'18.
Despite the healthy growth rates, domestic non-ferrous metal production remains in excess of consumption, it said.
The excess supply situation in aluminium and zinc is likely to persist going forward as well, as domestic capacity is high and manufacturers are expected to operate the plants at a high asset utilisation level. This in turn would lead to large export volumes.
Off-take risks in the international market, however, would remain low, given the deficits in the global market and the cost competitiveness of the domestic manufacturers, it said.
A high proportion of export sales, however, would have an impact on margins, as typically export realisations are lower compared to domestic prices because of duty protections available on domestic sales, it added.
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