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December , 2022
Indian Copper market is gaining pace amidst global recession
21:13 pm

Pritha Misra


In contrast to the global economy, India is picking up the pace in recent times. India's economy, income, and consumption are all expanding, making it one of the world's copper markets with the fastest growth rates in 2022. Despite the global recession, the Indian copper market has left behind that of China. India's economy is booming across all industries, from manufacturing to infrastructure and real estate, thanks to increased demand following the Covid-19 outbreak, rising incomes, and several government programmes that have stimulated spending. According to the data provided by World Bureau of Metal Statistics, India's consumption of refined copper increased by 45% from 2021 to 435,466 tonnes between January and August of this year, exceeding worldwide growth of 4% and China's growth of 5% during the same time. It is believed by most of the big copper maker industries that demand for copper has returned to pre-Covid levels.

India's use of copper may set a record this year, while being dominated by China, which last year accounted for 55% of the world's demand for the red metal. This would demonstrate the strength of the nation's economic recovery after the pandemic. The real estate industry, manufacturers of home appliances, and businesses involved in the shift to renewable energy sources like solar, wind, and electric cars are among the biggest consumers of copper. Researchers have anticipated solid domestic growth, which will be fuelled by a rebound in housing demand, increased automation, a transition to e-mobility including metro and railway electrification and a robust pipeline of renewable energy and infrastructure projects.

The dwindling market of copper

The demand for copper has been volatile throughout the last month. Last week was tough for the industry as the US dollar increased along with US bond yields, which put pressure on copper and other base metals. This was mostly because the market's expectations for a pause of rate hikes were eroded by the US Fed's hawkish comments. A higher currency and recent Covid-19 limits in China, the largest user, dampened expectations for demand, and prices started the new week on a negative tone. Prices were influenced by equity markets as well, particularly Asian equities, which became reluctant as investors worried about the effects of new Covid-19 limitations in China on the Chinese economy.

After falling earlier in the month, copper prices increased due to a weaker US dollar and the spread of the news that interest rate hikes may slow down. In a coordinated attempt to help the country's struggling real estate market and stabilize prices, three of China's largest commercial banks have agreed to provide financing support to property developers. As a result, the dollar dropped to a one-week low against its rivals.

Copper demand in India

As per data by Wood Mackenzie, India's robust copper demand was supported by an expanding domestic end-use market brought on by rapid urbanisation, industrialisation, and government stimulus programmes. Investments are being attracted by the government's output-linked incentive programme for white goods, which also encourages the production of copper tubes for air conditioners. Import taxes on copper-fabricated goods have also aided domestic semi-production, which uses refined copper. Several consumers of refined copper from India have stated that lower copper prices—down by around 23% from its record high in March—have also prompted market participants to resume orders and projects. Increased domestic production and a boom in imports from Japan, which has a free trade agreement with India, prevent a shortage of refined copper in the Indian market.

 

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