Copper In India

ICA INDIA 2018 YEAR END REPORT

Copper and sustainable development are aligned as copper is a metal that influences multiple verticals and United Nations’ goals for development. Admittedly, many sustainable development trends rely on copper for its characteristics and temperament.

Right from air quality, electrical safety, energy efficiency, inclusive energy, renewable energy, alternative vehicles, and climate change, the criticality of copper comes into play.

However, limited awareness of this element’s role in sustainable development crucially affects its application, undermining its importance. Globally, economic growth is contributing to the growth of the copper industry.

In the year 2017 the global copper demand of semis grew by 3% y-o-y to reach 26,941 KT as compared to 26,162 KT in 2016.

Global Semis Demand by Region (Comparison of 2007 and 2017)

The two pie-charts above show the geographic distribution of semis demand. In the years, China’s market share almost doubled from 26% to 48%. With the exception of India, geographic market share of all other regions has declined since 2007. India has shown growth of one percentage from 3 to 4%. What is of interest is that while Europe’s share of semis demand has declined – from 22% in 2007 to 17% in 2017 – the decrease is much less than for any other region (other than China and India)

In the recent past, Chinese usage has been driven by many government initiatives such as the 13th Five-Year Plan (2016-2020), Made in China 2025, and Belt and Road.

Coming to India, the total Copper usage in India grew by CAGR ~6% during FY16 to FY18 to reach 1,065 kT from 941 kT in FY16. The electrical sector continues to be biggest user of copper and its usage grew by CAGR 5% during the period. It was consumer durables and transportation sectors which recorded the higher growth in copper usage at CAGR 11% and 12% respectively. Several government and industry initiatives, in addition to collaborative efforts, are responsible for this growth. Copper has been recognized as the metal for ‘Today and tomorrow’ as it offers many innovative solutions. Government initiatives such as ‘Electricity for all 24x7’, developing SMART cities, National Mission on affordable housing for all, and efforts to reduce carbon footprint are expected to favourably affect the growth of copper. These factors will increase copper demand in the form of wires and cables, high efficiency motors, distribution transformers, renewable energy, electric vehicles, and more.

Moreover, as the Indian economy grows, increasing disposable income, urbanization, large young working class, formation of large megacities and new cities, and infrastructural push led by the government through various plans and policies, would lead to rise in copper demand across businesses verticals. This surge in demand will witness innovation that will push the industry to adopt energy efficient copper alternatives.

In FY17, the demand for copper (992 kT) was relatively subdued due to the impact of demonetization. Today, as per the market feedback, the impact of GST implementation was witnessed for a relatively shorter period of second / third quarter of the FY 2018. Sectors such as the Building Wires witnessed a more pronounced shift in supply from un-organized to organized sector because of GST implementation in India.

Breakdown of the current demand for Copper in India (FY18) in kT, %share