Copper consumption in India is likely to remain subdued this calendar year due to an ongoing slowdown in key user segments like construction, power, industrial machinery and equipments. Comprising around 90% of India’s copper production, these sectors have been facing huge decline in consumer spending for the last several months resulting into an accumulative lower growth of the red metal this year. A study by the leading rating firm Icra forecasts India’s copper consumption growth to remain at 4% this year as against 6.3% during the last calendar year. The study estimates total copper consumption this year at 562,000 tonnes as compared to 540,000 tonnes in the previous year. Consumption of copper in India is directly linked with the growth in the country’s economy. Hence, the decline in the use of copper indicates a contraction in demand of consumer products from the sectors including electrical and electronics, housing and other items for abundance use of the red metal. India’s copper consumption may witness a dip in 2012, in view of slowdown in key end-use segments, an Icra analyst said. Although India’s annual per capita consumption of copper has increased from 0.23 kg in 2000 to 0.5 kg in 2011, it compares poorly with China’s per capita consumption of 5.9 kg. Over the medium term, India’s per capita consumption growth is not expected to mirror the strong growth trend evident in China. Substantiating this view, Pukhraj Sethiya, Manager, PricewaterhouseCoopers, said, “The demand of base metal especially copper has seen gradual increase over years barring last few months. In general the base metals market has remain stable and prices have increased over period. The future outlook of base metals also shows relatively stable demand and price scenario in longer term though there may be short term troughs.� India’s primary copper production capacity remained at around 950,000 tonnes per annum over the last few years which is set to increase to 1.45 million tonnes by 2014-15 with higher exports of refined copper and products to Europe and Africa. Due to increase in copper price in global market, the investments in base metals sector has seen revival over past few years. For example, the public sector copper producer Hindustan Copper has reopened its closed mines by engaging private operators in some of the mines. India still relies on imports for meeting significant component of its base metal demand and sector still have investment potential. Although world copper prices increased 17.2% to $8,828 a tonne, they experienced a sharp fall from August 2011. By comparison, domestic prices increased 16.6% to average Rs 455.3 a kg. Domestic prices have however declined at a lower rate from late-2011 because of the substantial rupee depreciation. Globally, China accounted for 40.6% of world apparent consumption in 2011, followed by US (9.0%), Germany (6.4%), Japan (5.2%), South Korea (4%) and India (2.8%). While China’s share in world consumption increased from 12.7% in 2000 to 40.6% in 2011, India’s share increased from 1.6% to 2.8%. In 2012 copper prices are forecast to decline 10-11% to average around $7,900 a tonne. The red metal price averaged $8,103 a tonne during the first half of 2012 which is expected to decline to around $7700 a tonne for the second half. Currently, copper price is prevailing at $8227 a tonne on the benchmark London Metal Exchange (LME). The decline reflects the significant decrease in copper prices from the second quarter of the current calendar year being sustained over 2012. Copper prices are forecast to decline 3-5% in 2013 as growth in world refined copper production is expected to outpace growth in consumption in 2013, placing downward pressure on prices. Sethiya, however, believes that future prospects for base metal market depend on the China’s economic performance which accounts for over 40% of global base metal consumption.

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